There's a "loop hole" to pay down student loans with US savings bonds and get to exclude the interest from taxation.
Contributions to a 529 plan are a qualified educational expense for the savings bond interest exclusion. It's call a rollover and must be done within 60 days of cashing the bonds.
After doing that, you can pay down the student loans with a distribution from the 529 plan. Student loan payments (up to $10,000 lifetime maximum) is a qualified expense for a 529 distribution.
But directly paying loans with cashed bonds is not qualified.
