I have some private student loans that my parents co-signed on when I started law school. If my parents wanted to help me out and directly pay off those loans, would that payment be considered a gift (and thus taxed)? Or because they are secondarily liable on the loans anyway, as co-signors, if they could do that with no real consequences. For some reason, I have seen conflicting answers when I have searched for this online.

Thanks!

That’s a good question.  A tax question.  I don’t know the answer off the top of my head but my instinct is that it would not be a gift since your parents are obligated on the loan.  If I get a moment, I’ll look at some provisions and see if I can hone in on that.