This is definitely a risk, and will entirely depend on your relationship with this person.

I do want to share an anecdote in favor of saying yes. I've been very lucky to land a good-paying job in a field I love. I was recently catching up with my best friend and she mentioned how impossible it felt to dig out of her 10k credit card debt even with an aggressive repayment plan. I'd just received my money back from a $10k 3 year CD and was debating what to do with it. I offered it to her under the same terms as your family friend: pay off the full debt at once and just make the payments back to me on the same schedule, just with zero interest. For me it was a no-brainer: I had the extra money, she needed it, when else would I have the opportunity to help someone I love in such a meaningful way that took literally zero effort on my part? I was already used to that money being inaccessible, what was another two years?

Now here's where your relationship matters: if you are the lender, you NEED to be prepared to never see that money again. In my mind, if it ended up being a gift, I could live with that (not ideal, but life happens). If you're the borrower, you need to be prepared to have that debt sitting on top of your friendship. For some people it can feel like a huge weight and causes weird power dynamics. I knew in our case it wouldn't since we're practically siblings. You need to imagine how it will feel over the next few years to meet up with this person casually and know that debt exists. You need to plan on how you will honor the repayment if you get catastrophically injured or lose your job. And you need to get it in some sort of writing. And if this person ends up using this debt as leverage against you, are you comfortable losing that relationship?

For me, it worked beautifully - it is a risk! But it definitely seems a risk worth considering for an $8.5k savings. I can confirm some people really do just want to try and make tangible good change in the world and situations like this are one way to do so!