7 ways parents can help students pay off student loans

If your child needs to take out student loans to help pay for school, that’s nothing to feel bad about. After all, most students pay for their education using a variety of funding sources, including grants and scholarships, savings, loans, and yes, help from their parents. But if you want to help them pay off those loans, you absolutely can. Here are some ways you can give your student a financial boost in their loan repayment, whether you’re able to provide a small monthly contribution or a hefty lump sum.

1. Help them make in-school payments

Unless your child has opted for an in-school repayment plan, students who are enrolled at least half-time typically are not required to repay their student loans until after college graduation and their subsequent grace period ends. Unless your child has a subsidized federal loan, interest still accrues during in-school deferment and their grace period. When the deferment and grace period end, the accrued interest amount is added to the total amount of their loan (i.e., capitalized), which increases their total loan balance and monthly payment amount. Making in-school payments for your student—even small ones—can make a difference in their total debt when they enter repayment.

2. Try to match your child's payment

Free money from parents can really help a student to get more serious about paying off their student loans. If you can afford to match their payments dollar for dollar, this could motivate a recent grad to pay more than the minimum amount on their loans. Make it clear, though, that you’re contributing extra payments, and not simply giving them money toward future bills. Use our repayment calculator to help you see how making extra payments affects the total interest paid on a loan. If you can afford, contribute what you can, and your child will feel like they are not facing their student loan debt alone.

3. Help them out with other expenses

Even if you don't have the ability to put money toward your child's student loan, you can still help ease their financial burdens. Buying your child groceries from time to time, inviting them over for dinner regularly, or even letting them live with you rent-free while they tackle their loans can be a huge help. Make it clear that your assistance is meant to help them get ahead on their loans. The goal isn't to give your child a free ride through life, but instead to give them the boost they need to become financially independent.

4. Give the gift of loan payments

While your child might have other items on their wish list, a payment toward their student loans for a birthday or holiday may be more helpful. Ask other family members if they are willing to do the same, which can help give your child extra funds to pay off their debt even faster. If you find yourself with a windfall of cash and want to pay off your child’s loans in a lump sum, talk to a tax professional about whether you need to file a gift tax return.

5. Take out a parent loan

To reduce the amount your child has to borrow, you can consider taking out a parent loan to help pay for their education. Parents have several options for loans, including Parent PLUS Loans, which are available through the federal government, and private parent student loans. There are also alternative ways to pay for college like home equity loans or borrowing from your 401(k). However, it’s important not put your own financial well-being—and in particular your retirement savings—in jeopardy. There are loans to help pay for college, but there are no loans to help pay for retirement, so consult a financial advisor before making any final decisions.

6. Cosign a refinancing loan

Consolidating or refinancing student loans may help your child get a better interest rate and lower monthly payments. Having a creditworthy cosigner can help them qualify for a better interest rate than if they applied for a private consolidation loan on their own. If you are confident in your child’s ability to pay back their loans (and/or prepared to do so for them in the case that they can’t), this can be a great way to help out your student.

7. Help them make career connections

Landing the right job is difficult for many recent graduates because they often don't have the contacts necessary to find stable careers in their chosen field. Tapping into your own network, both professional and personal, to connect your child with people who can help them professionally can give them a leg up in building their early career. With a job in their field, they will be better positioned to establish their own financial goals, including a plan to pay off their student loan debt.

If you are able, there are several ways to support your child with their student loan payments depending on what works best for your family. Ultimately, any extra help you provide will get them closer to paying off their debt and becoming financially independent.