They're telling us that the only alternative is a 3k reduction in purchase price, but obviously this isn't as beneficial for immediate repairs.Is there another way for the seller to concede 3k so we can have that upfront cash savings for repairs?

The alternative is I offer to pay him a 10-15% investment on his loan of $50k so in return he would only be receiving $5-7.5k.

I knew there had to be a better alternative out there.

I only suggested the addendum because the OP did not want to evict them so I only suggested possible alternative as well suggestions of agencies that may pay rent for the tenants.

Have you tried looking at sofi.com, prosper.com, lendingclub.com or other alternative financiers to see if there's an option for refinancing that student loan debt?

An alternative to removal is to cover over it with thin drywall (1/4 or maybe 3/8 inch depending).  

My home warranty covers appliances, a/c and heating, plumbing, garage door, termite treatment, carpet cleaning, etc.

A trial modification while in trial period is a forbearance and typically are not recorded as those exist as a temporary alternative to the original note terms until conditions are met.  

Look into a Solo 401K as an alternative.    

The Ductless Mini Split is a viable alternative.