Can I Transfer Student Loans to Another Person?

Student Loan Debt and Liability

Student loans are financial obligations taken to fund higher education. While individuals often seek ways to manage or transfer this debt, a direct transfer of a student loan to another person without a formal process is generally not possible. Student loan debt is primarily the responsibility of the individual who signs the promissory note, a legal document outlining the borrower’s obligation to repay. If a co-signer is involved, they share equal legal liability for the debt. Both parties are equally responsible for repayment, and the lender can pursue either for payment if the other defaults.

The contractual nature of student loans prevents a direct transfer because lenders assess the original borrower’s creditworthiness and financial capacity. Assigning the debt to another person without a new credit evaluation would undermine the lender’s risk assessment and is not permissible under standard loan agreements.

Federal student loans, issued by the U.S. Department of Education, are non-transferable and tied to the student’s enrollment and financial need. Private student loans, offered by banks and other financial institutions, also establish a direct contractual relationship with the borrower and any co-signer, making them similarly non-transferable.

Refinancing Student Loans with a New Borrower

While a direct transfer of student loan liability is not feasible, refinancing offers a method for a new individual to assume primary responsibility for the debt. This process involves a new borrower applying for a new loan, using the proceeds to pay off the original student loan. The new loan is then solely in the new borrower’s name, making them fully liable.

For private student loans, a parent, spouse, or another creditworthy individual can apply to refinance the existing debt. The new applicant must meet the lender’s credit and income requirements independently. If approved, the new loan replaces the old one, and the original borrower is released from their obligation. This effectively shifts the debt to the new borrower, who now has a new loan agreement with potentially different interest rates and terms.

Federal student loans cannot be directly refinanced into another person’s name while retaining their federal status. However, a new borrower can take out a private student loan in their own name and use those funds to pay off the original federal loan. This converts the federal loan into a private loan, forfeiting all federal loan benefits and protections, such as income-driven repayment plans, deferment, and potential loan forgiveness.

Refinancing differs significantly from co-signing. A co-signer shares liability with the primary borrower on an existing loan and does not become the sole owner of the debt. In a refinancing scenario with a new borrower, the original loan is paid off, and the new borrower assumes full and sole responsibility for the newly issued loan.

Alternative Approaches to Payment Assistance

Individuals seeking to help with student loan payments without formally assuming the debt liability can explore alternative approaches. One common method involves gifting money directly to the borrower. The individual provides funds to the student loan holder, who then uses these funds to make scheduled payments. The legal responsibility for the loan remains entirely with the original borrower, and the gift does not alter the loan agreement.

Another approach is for another person to make payments directly to the loan servicer on behalf of the borrower. This action ensures payments are applied to the loan account, helping the borrower meet their obligations. Similar to gifting money, making direct payments does not change the legal liability for the debt; the loan remains in the original borrower’s name. The loan servicer will continue to communicate with and hold the original borrower accountable for the loan terms.

Informal agreements between individuals to split or cover loan payments are also possible. Family members or partners might agree to contribute a certain amount each month toward the student loan. These arrangements are not legally binding on the loan itself and do not involve the lender. The original borrower remains the sole party responsible to the lender for ensuring timely and complete payments, regardless of any internal agreements.

Key Considerations for Shared Loan Responsibility

Shared loan responsibility arrangements involve financial and legal implications. When a loan is refinanced into a new borrower’s name, both the original and new borrower’s credit reports are affected. The original borrower’s credit score may improve as the debt is removed from their credit report, while the new borrower’s credit will reflect the new debt obligation. Informal payment assistance, such as gifting money, does not directly impact the original borrower’s credit score, as the loan remains in their name and payment history continues to be reported under their identity.

Gifting money for loan payments can have tax implications for substantial amounts. For 2025, an individual can gift up to $19,000 per recipient per year without incurring gift tax or needing to file a gift tax return. Gifts exceeding this annual exclusion amount contribute to the donor’s lifetime gift tax exemption, which is $13.61 million for 2024. If the lifetime exemption is exceeded, the donor may owe gift tax.

Establishing clear, formal agreements can be beneficial when an individual is taking over payments informally or through a private refinance. While not impacting the loan agreement with the lender, a separate promissory note or written agreement between the individuals can outline repayment expectations and protect all parties involved. This document can clarify whether the funds provided are a gift, a loan, or a shared responsibility, preventing future misunderstandings.

Refinancing federal student loans into a private loan, even under a new borrower’s name, results in the permanent loss of valuable federal loan benefits. These benefits include access to income-driven repayment plans, which adjust monthly payments based on income and family size, as well as opportunities for deferment, forbearance, and various federal loan forgiveness programs. Borrowers should carefully weigh the potential loss of these protections against the perceived benefits of transferring the loan.