My daughter and I have four $1,000 "co-owned" Series EE bonds purchased in 8/1992 with each valued at $1,395. She is not currently attending college and owes $5,500 in student loans. I am the first listed on the bond and it shows my social security number. Her name is listed too. Can the bonds be redeemed by her under her social security number so she claims the interest as income? Is there any tax benefit from using the bonds to payoff a student loan?

ANSWER

The BIDaWIZ Team's Answer:

Either co-owner of Series EE bonds can sell them. The fact that your social security number is associated with the bonds doesn't restrict your daughter from selling them; it is merely for tracking purposes. The interest earned on the bonds would still be taxable even if it is used to pay off the student loans. Series EE bonds must be used to pay for qualified educational expenses to be excluded from income. A student loan is a credit product and doesn't directly qualify as an educational expenses.