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...we will be footing the bills for the degree, room and board, insurance, and car. Probably $50,000 all-in.

That's a fair chunk of change in a short time. This can run afoul of imputed income to your nephew kinds of things. A loan contract, as suggested by another would help alleviate this.

Also, gifting him the money (your wife and you each doing so brings the annual amounts under your collective gift limits) would alleviate this, too. For this large a set of gifts, you'll likely want to keep careful records in case the tax man comes a-calling. And the gifts will count against your lifetime limit on this sort of thing (it's a large lifetime limit, so even $50k isn't much of a hit...).

Eric Hines
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