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Can you pay off someone else’s loan? As a general rule, yes — so if you’re a student loan borrower and someone offers you assistance in paying off your loans, you may want to take them up on it. But it’s important to understand the implications. While a parent, grandparent, or even a mysterious benefactor could pay off your student loans, they may be responsible for a gift tax if they contribute more than the annual limit. The gift could also come with emotional strings attached.

Read on to learn about the tax implications of paying off someone else’s student loans — and how to repay your loans if the responsibility is all yours.

Student Loan Repayment

For federal student loan borrowers, the end of the three-year pause on federal student loan payments has made repayment top of mind again. The resumption of federal student loan payments, which was part of the debt ceiling bill President Joe Biden signed into law in early June 2023, requires interest accrual to resume on September 1, 2023, and payments to resume on October 1, 2023. (Borrowers who held private loans did not have any uniform break in payments.)

Additionally, the President’s plan to forgive up to $20,000 in federal student loan debt was struck down by the Supreme Court in late June 2023. That means federal student loan borrowers no longer have that course of action.

The bottom line: If you have a student loan balance, it needs to be paid. If you have a cosigner — which may be the case if you have private student loans or federal PLUS Loans — then that person is legally responsible for repaying the loans if you are unable to do so. But if your student loans are solely in your name, you are responsible for repayment according to the outlined terms.

Getting Help From Your Employer

More employers are offering student loan repayment as a perk. Through CARES Act legislation, employers can contribute up to $5,250 per employee per year toward student loans without the payment counting toward the employee’s taxable income, through 2025.


💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.

Can Parents Pay Off Their Child’s Student Loans?

Yes they can. But can parents pay off student loans without a gift tax? It depends. If a parent is a cosigner, paying the student loans in full will not trigger a gift tax. In the mind of the IRS, the parent is not providing a gift but is paying off a debt.

However, if a parent is not a cosigner, a gift tax could be triggered, depending on how much they pay.

How the Gift Tax Works

The gift tax applies to the transfer of any type of property (including money), or the use of income from property, without expecting to receive something of at least equal value in return, the IRS says — adding that if you make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions. Gifts between spouses aren’t included in the gift tax. That means if you are married and your spouse pays off your loans, that would not trigger a gift tax event. (The IRS includes lawfully married same-sex couples.)

Tuition paid directly to qualifying educational institutions in the United States or overseas is also not subject to gift tax. But student loans are different.

The annual exclusion for gifts is $17,000 in 2023. That means an individual can give you up to $17,000 without triggering the gift tax, which the givers, not receivers, generally pay. If your parents file taxes jointly, they would be able to give a combined $34,000 a year, which could include paying down loans. Borrowers who have the good fortune to snag $17,000 from Mom, Dad, Granddad, and Grandma could get a total of $68,000 without any family member having to file a gift tax return.

Note, though, that even a gift of more than $17,000 towards your student loans doesn’t mean that your generous benefactor is on the hook for paying a tax on their gift. The excess amount just gets added to the lifetime exclusion — currently set at $12.92 million. As long as the benefactor’s total lifetime gifts are below that amount, they don’t have to worry about paying a gift tax. Still, if bumping against that lifetime exclusion is a concern, they can spread out their support over the years to avoid gifting you more than $17,000 in a calendar year.

The upshot is that the main concern when it comes to helping children out with their student loans is probably not the gift tax, but whether the parent can afford it. It’s a good idea for parents to consider their retirement plans and test what-ifs before offering to pay their children’s student loans. Working with a financial planner may help parents find a path that works for them and their children.

It’s also not an all-or-nothing decision. Some parents choose to pay a portion of student loans or offer cash toward repayment in lieu of other gifts.

Recommended: Should Parents Cosign on Student Loans?

What Happens When Someone Pays Off Student Loans For You?

A person can pay off student loans for you in a couple of ways:

•   Pay the lender directly

•   Pay you, with the expectation you will pay the lender

But if someone pays off your debt, is that income? Once another person has paid off your student loans, it’s as if you had paid them off yourself. You would not have any tax liability.

Other Options to Pay Off Student Loans

Not everyone has a benefactor, of course. While someone taking your student loan balance down to zero can seem like a dream, there are realistic ways to ease the burden of student loans, no third party required.

These strategies include student loan consolidation, student loan refinancing, and in some cases, student loan forgiveness.

The one thing that won’t help: if you stop paying your student loans. Ignoring your student loan payments will result in an increased balance, additional fees, and a lower credit score.

If you hold federal student loans and stop paying them, part of your wages could be garnished, and your tax refund could be withheld. If you default on a private student loan, the lender might file a suit to collect from you.

In other words, coming up with a repayment plan is crucial.


💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

What Is Student Loan Consolidation?

If you have federal student loans, you may consider consolidation, or combining multiple loans into one federal loan. The interest rate is the weighted average of all the loans’ rates, rounded up to the nearest one-eighth of one percentage point.

Federal student loan consolidation via a Direct Consolidation Loan can lower your monthly payment by giving you up to 30 years to repay your loans. It can also streamline payment processing.

Consolidating federal loans other than Direct Loans may give borrowers access to programs they might not otherwise be eligible for, including additional income-driven repayment plan options and Public Service Loan Forgiveness.

What Is Student Loan Forgiveness?

Although President Biden’s federal forgiveness program was blocked by the Supreme Court, there are still several paths toward student loan forgiveness for federal student loan holders. They include:

•   Income-based repayment. Federal income-driven repayment plans promise loan forgiveness after a certain amount of time, depending on the plan.

For instance, under President Biden’s new SAVE Plan, which is based on income and family size, qualifying federal student loan borrowers with undergraduate federal loans can get their monthly payments reduced by half — from 10% to 5% of their discretionary income. And after 10 to 20 years of making payments (the number of years depends on how big their original student loan balance was), the remainder of what they owe will be forgiven.

•   Public Student Loan Forgiveness: This federal program was designed to help graduates working in public service have any remaining loan balance forgiven if they meet criteria that include working for a qualifying organization and making 10 years’ worth of payments.

•   Disability discharge: Some people may have their loans forgiven because of total and permanent disability.

What about bankruptcy? It’s extremely difficult to have student loans discharged through bankruptcy.

What Is Student Loan Refinancing?

With student loan refinancing, a borrower takes on one new, private student loan to pay off previous federal and/or private student loans. Ideally, the goal is a lower interest rate. The repayment term might also change.

However, there is a very important caveat for those with federal student loans: Refinancing those federal loans means that borrowers will no longer be eligible for federal repayment plans, forgiveness programs, and other benefits. If a borrower needs access to those programs, student loan refinancing won’t make sense.

But for borrowers who have no plans to use the federal programs, a lower rate could make refinancing worthwhile. Using a student loan refinancing calculator can help a borrower see how much money they might save by refinancing one or all of their loans.

Refinancing Student Loans With SoFi

Even if your parents, grandparents, or others in your life are not in a position to pay off your student loans for you, understanding your options for potentially lowering your monthly payments or saving money over the life of a loan can give you multiple avenues to explore as you work toward taking control of your finances.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Can I pay off my child’s student loans?

Yes, you can pay off your child’s student loans. But, depending on the amount, there may be tax implications.

Is paying off a child’s student loans considered a gift?

Yes. Paying student loans for someone else is considered a gift and would incur a gift tax for any gift above $17,000, which is the gift exclusion cutoff for 2023.

That means both parents can contribute $34,000 per calendar year toward their child’s student loans without owing gift tax.

Can I pay off my sibling’s student loans?

Yes. You can absolutely win sibling of the year and pay off your sibling’s student loans. Just know that any gift above $17,000 in 2023 will trigger a gift tax that you will be responsible for paying.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
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When someone heads off to college, they are often setting up a whole new household. They want and need items that help them get their new lifestyle up and running. If you are buying gifts for a student, you can help them achieve that by giving them items that are convenient, practical, and a little bit fun.

That’s where this list can come in handy. It identifies some of the most useful, in-demand gifts you could give a recent high-school grad or current college student. Plus there are clever ideas that may well elicit an “I love it!” from the recipient, such as a subscription to a favorite streaming service.

Read on for smart, inspiring ideas for presents for the students in your life.

Apparel and Accessory Gifts for College Students

College students need to be prepared for any situation on campus, whether that’s a winter storm, a job interview, or a trip to the school’s gym to workout. Clothing and accessories are college gifts that are likely to be appreciated. They’re practical, of course, and can help the recipient save money on clothes.

1. Backpack

A good-quality and versatile backpack is a college staple. Your college student may want a waterproof bag with plenty of compartments with room for books, a laptop, and other personal items. The backpack should also be comfortable to carry around throughout the day and durable enough to last for several semesters.

2. Messenger Bag or Tote Bag

An office-ready tote or messenger bag can be great for internships or interviews. Plus, it can be used beyond college.

3. Activewear

Whether they’re playing on a college team, a regular at the gym, or just like the style and comfort, activewear can be a useful gift for most college students. There are many different styles and brands at various price points.

4. Gym Bag

For college students who may use the school’s gym facilities or participate in a sport, a gym bag is essential. Make sure to get an appropriate size bag depending on how much they need to carry.

5. Outdoor Winter Gear

This may not be as important if they’re attending school in a warm location, but students need warm winter clothing when they’re walking back and forth between classes. Your college student may need warm winter boots for the snow, a heavy coat, thick socks, a hat, and gloves. And those can be pricey, so they make a great gift.

6. Waterproof Gear

The last thing a college student wants is a wet bag while they’re carrying their textbooks and laptop. A waterproof backpack and an umbrella should help protect expensive gear and a raincoat and boots should keep your college student dry between classes.

7. College Hoodies/Sweatshirts

One popular gift for college students is a hoodie or sweatshirt with the school’s team logo. This can typically be found through the college’s website or they may sell them on campus as well.

This type of gear can be especially fun for students to wear when getting involved in on-campus activities and showing their school spirit.

8. Loungewear

The dorm will be home for the next couple of semesters so it’s important to be comfortable. Loungewear can be found online or in stores and come in a variety of styles and prices.

9. Professional Attire

A professional outfit is a must for the college student going on interviews or for any formal gathering. If you don’t feel comfortable picking out an office-ready outfit, there are subscription services available with styles based on the information filled out by the recipient, or a gift card to a specific store may work as well.

Another great idea for a present for a college student: a gift card to a specific store.

Recommended: What Is College Like?

Dorm Room Gifts for College Students

There are too many dorm room college essentials to list. The little things go a long way and can help make college life more comfortable and enjoyable.

10. Bedding/Blankets

Most colleges only supply a mattress, so students must bring their own sheets, blankets, and pillows. Colleges typically have dorm beds with a twin XL mattress, but it should be confirmed with the school before buying bedding. Make sure to buy an extra set of sheets so that they always have a clean set.

11. Basic Kitchenware

Whether your college student has a dorm room kitchen or will mostly be eating in the dining hall, basic kitchenware is a necessity for a quick meal or a late-night snack. Basic kitchenware includes utensils, knives, plates and bowls, cups, and food storage containers.

12. Laundry Basket

Dorms typically don’t provide a washer and dryer in the dorm room so students will need to bring their laundry to the communal laundry room.

13. Alarm Clock

Getting up on time for classes can sometimes be a struggle so your college student may need a little help. A digital alarm clock should do the trick even for the heaviest of sleepers.

14. Bathrobe

Aside from the comfort and luxury that bathrobes may bring, they’re a necessity for college. A bathrobe will give a little bit of extra security when your college student goes to take a shower.

15. Storage

Dorm rooms are usually small, so your student will want to maximize every inch they have. There are tons of great storage solutions from under-bed bags and bins, over-the-door storage racks, and hanging strips or hooks.

16. Desk Supplies

Desk supplies are a must-have and make great gifts for college students. Consider desktop organizers, pens and pencils, a lamp, and also a comfortable desk chair.

17. Lap Desk

A lap desk can make a convenient gift for college students to make studying around campus more comfortable. They’re portable and perfect for taking notes or setting a laptop.

18. Streaming Service

It’s easy to spend a lot of money on streaming services, and college students are typically on a tight budget. Get a gift card for one or a couple of streaming services to gift your college student.

19. Personal Safe

If your student has expensive or important items, it’s important they’re kept in a safe location. A small personal safe to protect valuables can give your college student some peace of mind when living with roommates. Plus, if they work a cash job and want to save the money for tuition, they will have a safe place to stash it.

20. Games

Board games or card games are perfect for a relaxing night with roommates and friends.

Food and Drink Gifts for College Students

College cuisine doesn’t have to be instant ramen or dining hall meals. You might help your student get set up to cook meals for themselves, which can be a way to 33 Ideas for Saving Money While Dorm Shopping

Tech Gifts for College Students

When picking out a tech gift, choose something that will make school life a little easier and maybe add some fun in between classes. The right gadgets will make workloads more seamless and save your student a lot of time and energy.

26. Laptop

A laptop is an essential school supply. While there’s always the library, laptops give students the freedom and flexibility to work on academic assignments anytime and anywhere. Laptop quality, functions, features, and prices vary widely, so make sure you know what your college student is looking for in a laptop.

Bonus: A laptop can be a way a student can earn money at home (or at their dorm room), whether selling things online or perhaps tele-tutoring in a subject they love.

27. Portable Charger

A portable charger ensures your college student can study, take notes, and work on assignments without worrying about their battery dying. Portable chargers come in a variety of forms with a range of features.

28. Noise-Canceling Headphones

Dorm rooms and other areas around campus sometimes don’t make the best environment for studying. Noise-canceling headphones give your college-bound student a distraction from the surrounding noise.

29. Power Strip

You can never have too many power outlets. Your college student’s dorm room may not have enough outlets for their needs.

30. USB Flash Drive

College students may need a reliable USB flash drive to use when going to the library to work on a project, when a printer isn’t working, or when moving large files. Flash drives come in a range of storage capacities and prices.

31. Portable Bluetooth Speaker

It may not be a must-have, but a portable bluetooth speaker is a fun gift for college students. There are even waterproof models for a little extra protection.

The Takeaway

Still, stumped when it comes to finding gifts for college students? Cash or gift cards go a long way and it allows your college student to purchase exactly what they want or need. A gift card can be used for their favorite restaurant or store or some cash can go towards college books, saving for college tuition, or anything else they may need.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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