College Planning

Can A Parent Pay Off A Child's Student Loans?

This article examines consequences a parent may face when assisting their child with student loans and ways to avoid these consequences, such as income-based repayment plans.

Student Loans: Can Parents Pay Off Their Child’s College Debt

As children struggle with their first few years of post-college life, parents are often tempted to help them out by paying down their student loans. It’s a generous impulse, but choosing to pay down your child’s student debts does have a few possible ramifications that you should be aware of before you start writing checks to lenders.

If you gift your child more than $14K a year (as of 2015) to assist with student loans, you could become liable for a federal gift tax. If your child has a spouse, you are also allowed to gift that individual an additional $14K for student loan repayment, but you cannot gift a married couple filing jointly more than $28K per annum without possibly paying a gift tax. You can find more information about gift taxes and gift tax exclusions on the IRS website.

If your child is still enrolled in college, consider a financial plan that would be more beneficial to both of you, such as simply paying the college’s tuition bills directly instead of taking out more loans in your name or your child’s name. You can make unlimited, tax-free “gifts” of educational expenses, as long as they are paid to the college, university, or postsecondary institution directly. You may also want to look into setting up a 529 College Savings Plan. These types of college savings plans can be a good option for navigating around any “gift tax” issues that you might bump into.

You may be relieved to know that President Obama’s student loan reforms have done a lot to make the burden of student loan debt more bearable for everyone, including parents. Rather than contributing large sums of your own money to help pay down his or her debt, help your child explore alternative options such as income-based repayment plans.

Income-based repayment plans (or IBRs, as they’re commonly referred to) limit your child’s student loan payment to 10% of their income “above a basic living allowance”. They also allow the remainder of your child’s student loan debt to be forgiven after 20 years, or if they work in the public sector (i.e. if they are a teacher or nurse, serve in the AmeriCorps or Peace Corps, or they hold a job with a non-profit organization, or a local, state, federal, or tribal government), their loans can be forgiven in just ten years through the Public Service Loan Forgiveness program.

When it comes to your child’s education, you will want to get an idea of how much you should be saving for college. If you need to find out how much you should be saving for your child’s college education, or if you need more info about the myriad ways you can help your child pay for college, be sure to consult the College Planning area of the Protective Learning Center.


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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Help Paying off Student Loan

Can a parent help pay off student loans? In short, yes. But as a parent, there may be other options for you to consider when helping your child pay off student loans. Paying for college can sometimes be tough. While student loans are an option, it's always better to plan ahead and save for college expenses. For more information, visit our learning center.

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