Federal Direct Loan repayment & the IRS
October 2, 2013 9:29 PM Subscribe
What are the potential consequences or complications of paying off your student loans all at once, "in cash"?
posted by désoeuvrée to Work & Money (10 answers total) 1 user marked this as a favorite
Let's say theoretically someone had a large amount of cash in a safe deposit box (not obtained illegally, but not by conventional means either), and wanted to use it to pay off their student loan debt to the tune of $40k or so.
1. Does the Dept of Education communicate with the IRS--would they notify the IRS that the loans had been paid off in an unusual manner (i.e. ahead of schedule/in a series of large payments)? How unusual is it to pay off one's loans in one fell swoop or a few fell swoops? Is it seen as inherently suspicious and/or would it trigger an audit, say?
2. What would be one's options for getting said cash to the Dept of Education without depositing it in their bank account? What if a few different people (non-relatives of the borrower) made payments to the account? Would this be noticed/considered suspicious, etc?