My son is a junior in college. We have been financing his education by using $5,500 a year in Federal Direct Subsidized loans in his name. I am paying for his college as a gift to him so that he will not be burdened with a loan upon graduation. Would it be best for me to pay off the loan over a period of time so as to help him build a credit history? If so, for how long? I do want to avoid unnecessary interest, so the shorter the period, the better. I might even be able to pay off the entire amount of about $20,000 when he graduates. — Martin B.

If paying off the loan in one fell swoop would jeopardize your ability to meet your monthly expenses, it's not worth it, says Michael Pontillo, a certified college planning specialist based in Croton-on-Hudson, N.Y. But if you have enough money to erase the debt, it makes sense to pay off the loan as soon as possible — ideally before interest starts accruing at the end of the six-month grace period after your son's graduation.

As for your son's credit history, it will receive a boost when the loan is paid off, says Pontillo, even if the debt is settled right away. And  your son has time to get a credit card and start building his credit history himself, adds the planner.

Just remember to pay attention to the gift-tax exemption. You can currently gift up to $13,000 per person per year without the gift's counting against your lifetime exclusion limit. (This year, the combined estate and gift tax exclusion is more than $5 million, but that figure may change next year.) If you're married, you and your spouse can give your son a combined $26,000 in a given year.

— Marc Mewshaw

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