Student loans ... is this illegal/unethical?

[am_vanquish]

My wife is going back to school to get her RN this August. Between our savings & her parents' leftover college savings, we've already got enough $$$ to pay for all the educational expenses (including the lack of income as she won't be working for the next 24 months). However, we've seen that several local hospitals offer some form of forgiveness where they pay xx% of your student loans for every year you work for them. My understanding is that they only pay outstanding student loans.

I've suggested that we take out a student loan, stick the money in a CD or something, then sit back and take our chances with letting her future employer pay the tuition costs. Worst case scenario is that we pay back the student loan from the CD -or other investment- ... maybe a slight loss on interest, but also good on our credit history. (We've only ever had 2 credit cards & every time I check our scores it says our credit history is too thin). Best case scenario, a hospital pays for up to 80% of the student loan & we can use the money in the CD for a downpayment on a house. Either way, the loan is paid off in full within 1-2 years of her graduating.

I'd like to take advantage of what we can (I feel like most government programs punish me for being fiscally responsible, so I wouldn't mind taking advantage). However, I feel like this is in a bit of a "gray" area, so my conscience is a bit uneasy.

Any ideas/suggestions? Let me know if you need any more info.

[disneysteve]

I see nothing wrong with that at all.

[creditcardfree]

I think its a fine idea, too. Sounds like a great way to make an investment in your financial future!

[ActYourWage]

However, I feel like this is in a bit of a "gray" area, so my conscience is a bit uneasy.

I think you answered your question there.

[disneysteve]

One question, which I think would settle this for me for sure.

Are the loan repayment plans based on need or are they offered across the board to all employees? If they are based on need and you don't really need it, that would be unethical in my mind. If everyone is eligible no matter what, why should you not take advantage of that offer?

I had this debate a number of years ago. My daughter went to overnight camp and we applied for scholarship money. The scholarship was NOT need-based. Pretty much everyone who applied got a grant. So we applied. We could have paid for camp on our own but it was sure nice to get some help doing so. There are those in the organization who feel it should only go to those with a financial need, but that isn't how it is set up so I saw nothing wrong with participating.

[am_vanquish]

The program is a national program called NELRP (Nursing Education Loan Repayment Program). As I understand, it is a system that is focused on rewarding commitments to work at a facility that is categorized as a "critical shortage facility." It's a reward, based on service, rather than assistance, based on need. Luckily, every hospital in our area qualifies. I see nothing that indicates it is need based (except the fact that they don't give money to those who don't have outstanding student loans). I've summarized the eligibility below, but the official website is here

Eligibility:
*Received a BSN or Associates w/ RN
*Outstanding loans obtained to get BSN
*Completed the program for which loan applies
*U.S. citizen
*Employed full-time at a critical shortage facility
*Has permanent license as RN

Based on DisneySteve's response, I feel pretty comfortable with the program. It means a bit more coming from a medical professional with a lot of financial wisdom. Also, I knew that you guys would ask any questions I might be omitting about the situation. Let's face it, education is expensive, and a 60% repayment is nothing to stub your nose at.

[disneysteve]

I actually lost out on a similar plan for physicians. The first 7 years, I practiced in an area that wasn't classified as underserved. Then I took my current position in an area that did qualify for loan repayment. I applied and was told that I didn't qualify because it was only for doctors who were new in practice, less than 3 years out of training.

[creditcardfree]

When I responded, I was looking at the repayment as part of the salary. An incentive to anyone that the hospital hired.

I still think in this situation it is okay to take the money when the time comes.

[mom-from-missouri]

I would say do it.
When I worked for the telephone company they paid tution for anyone who maintained a c or higher OR anyone who got a degree in telecommunications or electronics.
It was there way to get new college requits with fresh education.

[spicy14lingo]

It sounds like a great idea to me - no loss either way but still a great possible gain.