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Pay off 2nd mortgage with student loans?


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I just bought a house in IL, and I'll be going to law school this year. I qualified for the ~$18,000 in federal loans for "qualified education expenses," ie room & board etc. It's a 3/1, and I'm renting out 2 of the rooms(I'm living in the 3rd). I have a full scholarship, so all of the money should be earmarked for living expenses, rent, etc. My question is, can I use some of the procedes from the student subsidized and unsubsisized loan to pay down the 2nd mortgage? (subsidized loans don't accrue interest until I am out of school) How should I disclose this? Does anydbody have any experience doing this? I will only owe $11,390 on the 2nd mortgage, so technically, I could pay it off with cash, and keep the student loan? Is this possible/legal?

Thanks,

Sam B

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Have you asked this in the student loan forum?

 

From a mortgage lenders point of view they don't care how their loan is paid off as long as the money comes from you, and in many instances they won't care if it doesn't come from you.

Edited by liverichly
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  • 2 weeks later...
I just bought a house in IL, and I'll be going to law school this year.  I qualified for the ~$18,000 in federal loans for "qualified education expenses," ie room & board etc.  It's a 3/1, and I'm renting out 2 of the rooms(I'm living in the 3rd).  I have a full scholarship, so all of the money should be earmarked for living expenses, rent, etc.  My question is, can I use some of the procedes from the student subsidized and unsubsisized loan to pay down the 2nd mortgage?  (subsidized loans don't accrue interest until I am out of school)  How should I disclose this?  Does anydbody have any experience doing this?  I will only owe $11,390 on the 2nd mortgage, so technically, I could pay it off with cash, and keep the student loan?  Is this possible/legal?

Thanks,

Sam B

Keep in mind that your aid will be reduced by the scholarship amount. Other aid and scholarships is part of of calculating your financial aid package. You may have qualified for the $18k but once the scholarship money is applied, your aid will be reduced.

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