While student loans are usually the graduated borrower’s responsibility, many parents look for ways to help their children pay off their loans. Fortunately, there are ways that you can help pay back your child’s student loans effectively and smartly.

Student loans are taken out by many students every year. While the borrowed amounts vary considerably, the average student borrower graduates with about $30,000 or more in debt along with a degree, of course. Students who enter into the real world right out of college are in for a big wakeup call, especially when they receive that first bill they need to pay.

Plenty of parents everywhere help with some of the burden, so their children can get a start on life and labor. With that being said, there are more than a few ways to help pay for a kid’s college. Let’s explore some of the more efficient and smart ways to pay down student loan debt as a concerned parent.

Make a Lump Sum Payment

Since parents normally have much more money than their kids at this point, they can make a lump sum payment to their student’s loan debt. By making these payments, parents can effectively negate the building interest over their kids’ heads. No interest will accrue, and your kid will be left with less to pay. The ideal scenario would be to pay for the whole loan!

Overall, lump sum payments are best because you spend less money overall. You can take away a significant chunk of the loan while directly countering compounding interest. Not all parents will be able to make a lump sum payment, so the other options below may be a better move for you.

Make Monthly Payments

If you child is paying back these loans, then they are guaranteed to be stuck with the loan for several years if not more, especially when making minimum monthly payments. One way to contribute to your child’s financial well-being is to help by making monthly payments on your student’s student loans.

The best and most effective way to make this work is to have your child still make his or her minimum monthly payment towards the loan. Once that has been paid, you can then send in another payment which will be applied to the loan of your choice. Even paying just an extra $50 or $100 per month towards the loan balance will greatly reduce the amount of money spent over time and less interest will be paid out. Think of it as a tag team effort.

Focus on Private Student Loans FIRST

Another way to help your student with their student loan debt is to focus on private student loans first. Of course, this does not mean that you should not make the minimum monthly payments on other loans, but it means that you should put any and all extra money towards private student loans first.

Private student loans often have a higher interest rate and they do not offer as many benefits as federal student loans, so there is more of an incentive to pay them off first. Federal student loans come with a grace period of six months after the student graduates or drops below part-time in school whereas private student loans do not offer this.

Refinance Student Loans

If your child is paying a high interest rate on all of his or her loans, it may be time to think about refinancing them. This is a good idea, especially for those students who would like to pay less interest over time and manage smaller monthly payments.

When it comes to student loan refinancing, it is important to know that your child is unlikely going to qualify on his or her own to refinance. This means that you may need to act as a cosigner on the loan to ensure that they can receive the best options possible. While you may be hesitant to be a cosigner, you will be happy to know that most private lenders will allow you to remove yourself as a cosigner after so many timely payments or when the student displays financial independence.

Consider Matching the Money Your Student Pays

Another smart and effective way to help your student pay his or her student loans is to take a similar 401(k) approach. You can offer to match the amount of money that they send in every month. Therefore, if your child only sends in the $50 minimum payment, you match that for a total of $100. Even if your student only sends in the minimum amount, your matching money will help pay down the student loan quicker.

The idea behind this method is to motivate your child to send in more money, so that you can match it. If you are on a limited budget, then you may want to set some ground rules and offer to match up to a certain amount of money.

If done correctly, this method can help your student pay down his or her students loans in no time and your child will spend less in interest payments, too.

Final Things to Keep in Mind

As a parent, you naturally want the best for your child. This also means that you need to safeguard them too. For instance, instead of handing your child cash and telling them to send it to their student loan provider, write a check and mail it to the student loan provider. This way, the loan is paid and the money is not used frivolously.

Lastly, you may need to pay taxes on the money that you provide your child with for their student loans. Double check with your accountant or tax professional to find out more about gift money and taxes.

Student loan debt is a big burden, but with your help, your child will be able to pay down his or her student loan debt in no time.