I know the answer is yes, but will the parent then not have to pay income tax when they cash them in? And would the child have to be claimed on the parent's tax return?Can a parent pay off a childs student loans with EE bonds?
The parent can use the bonds for the child's education tax-exempt if the bonds were issued after 1989 and the child is listed as a dependent. There are some income limitations and you must report the child still as a dependent. The child's name can be listed on the bond as a beneficiary, but not as a co-owner. If it is listed as a co-owner, the child can redeem the bonds tax exempt for education.
In response to v b's answer, I was going out on a limb making an assumption that the student loans might have something to do with being a student, like tuition and books. If the child didn't have any qualified education expenses in 2007, you could not use the bonds tax exempt. The Publication mentioned is on the link below. Look at page 55-56. On page 57 is a wooksheet you can use for an example.
There is a lot more you can learn from reading the attached link.Can a parent pay off a childs student loans with EE bonds?
The parent would still very possibly have to pay income tax on them. Read the rules for the exclusion - you can find them in IRS Publication 17, Chapter 7, page 58 - download at irs.gov or pick up a copy at your local IRS office or public library.
IRS publication 970 lists the circumstances under which the bond interest would be tax exempt.
Student loans are NOT on the list of qualified education expenses, so the interest when the bonds are cashed *IS* income to you.