Can You Take Money Out of HSA Account to Pay Student Debt?

Many people wonder if they can use the funds in their Health Savings Account (HSA) to pay off their student debt. The short answer is yes, you can withdraw money from your HSA to help pay for qualified medical expenses, including paying off student loans, but there are some rules and regulations you need to follow.

When it comes to using your HSA funds for non-medical expenses like student debt, there are a few things to keep in mind:

• You can use your HSA funds to pay off student loans, but the debt must have been incurred for yourself, your spouse, or your dependents.
• The student loan must be considered a qualified medical expense by the IRS.
• If you're under 65 and use your HSA funds for non-medical expenses, you'll face a 20% penalty in addition to paying taxes on the withdrawal.
• After turning 65, you can use your HSA funds for any purpose without penalty, though you may still owe taxes on the withdrawal if it's not for qualified medical expenses.

It's essential to be informed about the rules regarding HSA withdrawals to avoid any penalties or tax implications. Always consult with a financial advisor or tax professional before making any decisions regarding your HSA funds.

While the primary purpose of a Health Savings Account (HSA) is to cover qualified medical expenses, many people ask if it's possible to use these funds to pay off student debt. The answer is somewhat nuanced. You can withdraw HSA funds for paying off student loans incurred for yourself, your spouse, or dependents, provided these loans meet the IRS criteria for qualified medical expenses.