Can I turn a family loan into a loan that qualifies for loan repayment?

February 26, 2009 7:33 AM

Can I turn a loan from a family member into a loan that qualifies for loan repayment?

I completed a very expensive nursing degree a year ago with a BSN and an MSN and am working as a nurse practitioner. I was fortunate enough to have an aunt who was willing and able to loan me the money during the program and I'm now paying her back interest-free. I know what a great deal that is, but it is still going to take me >15 yrs to pay her back and I have looked into some loan repayment programs that might help speed up the process.

The non-profit I currently work for qualifies as working for an under-served population, but I'm wondering if there is any way to turn my family loan into a qualifying loan. The nursing education loan repayment program I want to apply to (http://bhpr.hrsa.gov/nursing/loanrepay.htm) lists qualifying loans as:

2) Examples of Eligible Loans
Nursing Student Loans;
Stafford Loans; and
Supplemental Loans for Students


3) Examples of Loans Not Eligible

The following are examples of financial obligations that do not qualify for repayment by the NELRP:

• Loans for which the applicant has an Existing Service Obligation (see Definition of Terms);

• Loans obtained for training in vocational or practical nursing (LVN/LPN);

• Loans obtained from family members or private institutions not subject to Federal or State examination and
supervision as lenders;

• Loans made prior to or after the applicant's qualifying nursing education;

• Loans obtained for non-nursing education;

• Loans that have been repaid in full;

• PLUS loans (made to parents);

• Any portion of a consolidated/refinanced educational loan that is not clearly identified as being for
reasonable educational expenses and reasonable living expenses incurred for qualifying nursing education
by the applicant (See Definition of Terms).

• Consolidated/refinanced educational loans that include any debt other than eligible educational loans of the
applicant;

• Credit card payments or personal lines of credit;

• Federal Perkins Loans (unless the applicant can provide documentation as indicated in Section L.3
(Instructions for Completing Required Supplemental Forms) that such loans are not subject to cancellation).

Has anyone had a similar situation? Can I take out a loan that would qualify and pay my aunt back? Or is it just too late at this point?

Any input is appreciated, Thanks.

posted by hurricanemag to education (3 comments total)

Sorry, but your own provided data says, "No."

• Loans obtained from family members or private institutions not subject to Federal or State examination


Any private loan from individual to individual is considered "not subject to Federal or State examination" Even if you actually had soem kind of paperwork (which I doubt)

That's the primary advantage of a private loan.

There are other loan programs you could pursue, but generally the interest rate would kill you if you can't pay back a no-interest loan over 15 years.

MeFi Mail me if you are interested in obtaining other private/bank loans that you might not traditionally qualify for with your own bank or CU. Interest rates vary depending on the individual.
posted by emjay at 7:47 AM on February 26

Well, I don't think you can take out the loan now to repay and then use that loan as a qualifying loan (my first thought), because prima facie it would be a

"• Loans made prior to or after the applicant's qualifying nursing education; "
posted by bunnycup at 7:47 AM on February 26

Indeed, it sounds from the criteria you've given us like your loan won't qualify. But you may as well call these folks

HELP: [e-mail] or 1-800-221-9393. TTY line for hearing impaired: 1-877-897-9910, Monday through Friday (except Federal holidays), 9:00 am to 5:30 pm ET.

who will know for sure if anyone will. Can't hurt, and there's a chance it might help.
posted by nebulawindphone at 8:06 AM on February 26