Read my post regarding needing to have earned income in order to contribute to a Roth IRA. According to my brokerage firm, there is no way student loan "income" will count as earned income. Luckily, I'm married with a working spouse so I can piggyback off of her income. Check out the interest rates also, because they are decreasing progressively each year, but then the decrease stops in 2012 (or around there) and will reset to something like the 6.8% grad students pay (again, look this up because this is just a general overview from when I looked at it a few months ago). However, the loans taken out a the lower rate won't adjust because they are fixed rate loans, so only new loans would have the higher interest rate. So your daughter maybe only get stuck with the higher interest rate during her senior year.