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Debt Relief – Insolvency – Bankruptcy Information » Student Loan Help » Are there tax implications when parents take a 2nd mortgage and repay a (non-dependent) child’s student loan?

Are there tax implications when parents take a 2nd mortgage and repay a (non-dependent) child’s student loan?

My parents are refinancing their house and offered to pay off my student debt (~$90k) with money from a 2nd mortgage on the house. The interest rate would be lower than the student loan. I would then pay my parents back and our family will save on interest paid. I am married and not a dependent anymore. Are there any tax implications for myself or my parents if they do this? Is there anything else I should consider?

Thank you for taking the time to look at my question!

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2 Responses to "Are there tax implications when parents take a 2nd mortgage and repay a (non-dependent) child’s student loan?"

  1. Ryan M says:
    No consequences for you, except that YOU will not be able to write off ANY interest paid on the loan.
  2. tro says:
    no, this is a nice solution to a problem and you should make sure you write an agreement covering this loan stating the rate of interest
    your parents will claim the interest as income and possibly you will be able to claim as a credit, however, if not a legitimate loaning institution may be a problem
    the 2nd on their house is not for something for the house therefore they will not be able to claim this interest as a deduction in their itemized deductions

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