The Student Loan Trap II
Posted on June 5th, 2016 in General Interest

In our last blog we looked at financial issues surrounding student loans and how it effects people’s lives.   In this post we will continue this theme by examining how some people are using alternative strategies to get out of student debts.

Obviously paying your student loans, in the amount, due on time, is the most common way to erase the debt but as discussed in our earlier post most people are finding themselves unable to service the loans that acquired during their college. For many 20 somethings this is impossible to do.  Currently, college graduates in their 20s have an unemployment rate or roughly 12% compared to the national unemployment rate of 5%.  So many are finding alternatives.

One of the best alternatives is the Public Service Loan Forgiveness Program. This program pays off the student loan debt for people who work for qualified government agencies after making 120 payments, (10 years) while under the program.  So people employed by government agencies as teachers, nurses, police officers, administrative positions, etc.  If it is not for the governmental agencies, it could be non-for-profit or even tribal entities can also count toward this program.

Another program called the Kansas Rural Opportunity Zones tries to get people to move out to less populated areas of Kansas. To qualify one only needs to have a college degree, outstanding student loans and establish residency in one of the rural zones.  In return the participant will get free land and student loan assistance.

Similarly, New York has a program where one having student loan debt as a result of getting a degree form a New York based college can get debt forgiveness in return for running a farm for a minimum of 5 years.

Another interesting program in New York is the Move to Niagara Falls Program which tries to encourage people to move to Niagara Falls New York. In return for living there for 2 years as residents can get up to $7,000.

One non-governmental program available is the Be Zerobound program that rewards volunteer oriented student pays off debt in return.

Of course these program sounds great as long as you can make your monthly payments on your monthly government salary. Now it may sound strange to think that a person would spend 10 years of their working adult life purposely working for a government agency simply for the chance to have their educational loans paid off but some do. Of course it is a big risk because as we well know no government programs is safe when politics and budget fights enter into the mix.

Other strange thing noticed when looking into student loan payment alternatives include:

  • Some people have tried crowd funding in order to get friends and family to pitch in money for college.
  • When going back to school for an advance degree one Duke University student, already in debts from his undergraduate degree decided to live in a van, (not sure if it was down by the river) and took showers in the school gym. He made extra money by being a substitute teacher at an elementary schools and taking part in experimental drug trials. As a result, he graduated from college completely debt free.

By far the most extreme path noted during our research was Sugar Baby University.

Before we go any further I am not recommending this as a sound financial strategy to help with student debt and the ethics of such arrangements could be shady at best.

Now that we have the disclosure out of the way, Sugar Baby University is basically a dating site for young college girls looking to meet sugar daddies to help pay for college. According to their website they have over 5 million members with NYU showing the highest number of new members in 2015.

Generally, one cannot file bankruptcy to get out of student load dept. But after the IRS forgiveness has been granted the tax payer may have other avenues of resolving their IRS tax issues depending on other personal economic factors.

If you are having issues managing college debt and need guidance or want to learn more about various tax free options available to save for college, please feel free to call or email.

About the Author – Phillip Zagotti, CPA is the President of Zagotti and Burdette CPA, LLC. He can be reached at or (832) 800-3347. 

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