7 Ways Parents Can Help Students Pay Off Student Loans

Help them make in-school payments

Typically, students who are enrolled at least half-time are not required to repay their student loan until after college graduation and their subsequent grace period. Unless your child has a subsidized federal loan, interest still accrues during that time. When the grace period ends, that amount is capitalized, or added to the total amount of his or her loan. Making in-school payments for your student—even small ones—can make a big difference in their total debt when they enter repayment.

Try to match your child's payment

Free money from mom and dad can really help motivate 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 towards future bills (our prepayment calculator can help you see how making extra payments affects the total interest paid on a loan). While not every parent will be able to help in this way, contribute what you can, and your child will feel like they are not facing their student loan debt alone.

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 allowing them to 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.

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 just pay off your child’s loans in a lump sum, talk to an accountant about whether you need to file a gift tax return.

Take out a parent loan

In order to reduce the amount your child has to take out in loans, you can take out a loan yourself. However, it’s important that parents not put their own financial wellbeing—and in particular their retirement savings—in jeopardy in order to help out their kids. (After all, your student can get their own loan, but you can’t borrow money for retirement!) Parents have several options for loans, including Parent PLUS Loans (available through the federal government) and private parent student loans.

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 him or her 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.

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. This allows them to earn an income, so they can successfully pay off their loans.

Any way you can help your child with their student loan payments can help them financially down the road. If you cannot financially support your child with their student loan payments, figuring out other ways to help your child and having a conversation with them can be beneficial too.