Family tuition paid directly to a college is entirely tax-free for the student

Evidence

Back when very few Americans, and almost exclusively the wealthy, attended college, their families received significant tax breaks that continue today. If the bank of Mom and Dad (or Grandma and Grandpa) is paying for you to attend college, that money is treated as a tax-free gift to you for federal income tax purposes, provided it’s sent directly to the educational institution. … But if she could write a $55,998 tuition check directly to Emory University, the entire amount would be tax-free and there would be no need to further account for it. — Dorothy A. Brown, The Whiteness of Wealth, 317

Categorization

• DEFINE: Names the direct-payment-to-institution loophole, a little-known provision favoring families with cash to spare.