Aloha Awesome Mustachians!
When we get married this summer my Gramps wants to give us some thousands of dollars towards paying off my student loan. We looked up if this could go into a 529 but apparently you can't use 529s to pay loans (not unless they pass a bill - HR529). I'm on 10-year Public Service Loan Forgiveness and making income-based payments. I have 7 years remaining and at the end of the 7 years they will forgive whatever balance remains on the loan. Like a good Mustachian I am deferring lots of income into my 457 and 403B so my monthly loan payment is low. It is going to take at least 7 years to pay on this loan and Gramps is 90; Godwilling he will be around but we don't know. It doesn't make sense to use his gift as a 1-time payment as that would not result in a smaller monthly payment and the feds will forgive whatever remains after the 10 years. If I were to pay off my loan by myself in 10 years, I'd have to pay over $1,000 monthly! We welcome suggestions on how to do this, to move the money to an account earmarked for the loan, and pay it out slowly with these small monthly payments. Should we open a Roth IRA? But IRAs have the $5,500 cap... In whose name should the account be? Mine, my mom's, or my Gramps? I get a tax break for all the loan interest I pay (1098E)... Can I give the 1098E to my Gramps so he can claim it? Can anyone else get a tax break on this?
Many thanks,
Em