<p>My son's Stafford loans are due to be paid. I have saved enough to pay them off lump sum. I am wondering if there is any downside to my paying these in full on his behalf. Would my son realize an advantage if I gifted him the money ($9000) and he wrote the check? I'm thinking that if he writes the check he might realize a tax break or it might allow him to bolster his credit rating? I'm thinking there is NO advantage in paying these over several years. My son is not a teacher ... so no break to be realized there.</p>
<p>PS: posted this on the FA Forum ... but want to hear from M $ D's here as well.</p>
<p>If income is under $60,000(prorated between $60,000 and $75,000) there is a deduction of up to 2500 from AGI for the interest paid. If Congress does not extend the better payments, then in 2013 the student loan deduction will only be for the first 60 months of payments. If that $2500 would put him in a lower tax bracket, it might be helpful, but I can’t help but think that it is silly to pay interest when you don’t have to. With ony $9,000 I can’t imagine that the interest paid would make a big difference on the AGI anyway.</p>
<p>While I think it’s great that you are able to pay your sons loans - was that always the plan. I see that you have said that you saved enough to pay them off. I mean $9,000 is really not too bad and the payments shouldn’t be too bad. Are you sure that you won’t need that money down the road. In other words, don’t leave yourself empty handed just to pay off your son’s loans.</p>
<p>so what is the interest rate on the Staffords? Payoff time? Can the Staffords be consolidated? Job situation of DS? His spending/saving habits? Your financial health?</p>
<p>What are the opportunity cost for other proposals? We encourage DS to 401k/IRA, better Health Insurance, emergency fund, instead of paying off the student loan; By doing so, he gained some tax credits.</p>