<p>^^^^ Not knowing how much money we are taking about and what the financial situation of the donor is, I would be hesitant to say if the chances of the IRS getting involved are high or low. Colleges could ask for the source of money and they may want loan documents, the donor may be someone who has a lot of assets and income and needs to be careful about IRS audits etc.</p>
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<p>Yes, I agree that it not going to be difficult to structure the loan in a way that it is not a problem, but it may be advisable to have professional involved, especially if the donor is in a high income bracket and subject to IRS scrutiny.</p>