Can You Pay Someone Else’s Student Loans?

It is possible to contribute to another individual’s student loan repayment. This article explores how to support another’s student loan payments, including legal and tax considerations.

Legal Basis for Third-Party Student Loan Payments

Federal and private student loan programs permit individuals other than the borrower to make payments. This flexibility acknowledges the desire of family members to assist with educational debt.

There are two primary ways a third party can contribute to student loan repayment. An individual can directly remit payments to the loan servicer on behalf of the borrower. Alternatively, funds can be gifted directly to the borrower, who then uses those funds to make their own loan payments.

Preparing to Make a Student Loan Payment

Before initiating any payment, gathering necessary information and obtaining the borrower’s cooperation are essential. Loan servicers require the borrower’s consent to share account details or allow third-party access. This often involves the borrower setting up the third party as an authorized payer on their account.

Key information needed includes the loan servicer’s name, the borrower’s student loan account number, and the exact payment amount or outstanding balance. It is prudent to confirm the current amount due to ensure the payment covers the required installment or a desired principal reduction.

Making Direct Payments to Loan Servicers

Making a direct payment to a student loan servicer can be straightforward. Most servicers offer several convenient methods for payment submission. Online portals are a common option, allowing authorized payers to make one-time or recurring payments directly from a bank account. This method requires the third party to log in using credentials provided by the borrower or set up by the servicer.

Telephone payments provide another immediate option, often involving an automated system or speaking with a customer service representative. For this method, the third party will need the borrower’s account number and payment details, such as bank routing and account numbers or credit/debit card information. Mailing a check or money order is also an available method, though it takes longer for the payment to process. When mailing a payment, including the borrower’s full name and account number on the check or a separate payment coupon is necessary to ensure proper allocation.

After a payment is submitted, retaining a confirmation number or receipt is important for record-keeping. Online payments usually provide immediate digital confirmation, while phone payments may offer a confirmation number verbally. Mailed payments might be confirmed through an online account update or a statement from the servicer. Payment processing times can vary, generally ranging from a few business days to over a week for mailed checks.

Understanding Gift Tax Regulations

When an individual pays another person’s student loans, the Internal Revenue Service (IRS) considers this a gift. The donor is responsible for any potential gift tax implications. Federal tax law provides an annual gift tax exclusion, allowing a donor to give a certain amount to any number of individuals each year without incurring gift tax or requiring a gift tax return.

For the 2025 tax year, the annual gift tax exclusion is $19,000 per recipient. An individual can give up to $19,000 to another person without gift tax consequences or reporting requirements. If a married couple jointly makes the gift, they can combine their exclusions, effectively giving $38,000 to one recipient in 2025. Amounts exceeding this annual exclusion count against the donor’s lifetime gift tax exemption.

The lifetime gift tax exemption for 2025 is $13.99 million per individual. If a gift exceeds the annual exclusion, the donor must file IRS Form 709, the United States Gift Tax Return, to report the gift. This reduces the donor’s available lifetime exemption.