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Payoff student loan or use it as deductable?
By admin | December 27, 2007
Cindy16 asked:
My husband and I have around 30K student loan, interest is about 8%.
Right now we are paying monthly payment, sometimes pays extra in the good days, and hoping to pay it off sometime in the next 5-6 years.
But another hand, because student loan could be one of the income tax deductible, so we are not sure if we should keep the student loan as long as it takes and just pay minimum each month.
Which way actually save us money?
Use student loan as deductible each years or pay it off as soon as we can?
Tamara
My husband and I have around 30K student loan, interest is about 8%.
Right now we are paying monthly payment, sometimes pays extra in the good days, and hoping to pay it off sometime in the next 5-6 years.
But another hand, because student loan could be one of the income tax deductible, so we are not sure if we should keep the student loan as long as it takes and just pay minimum each month.
Which way actually save us money?
Use student loan as deductible each years or pay it off as soon as we can?
Tamara
Topics: student loans |
December 30th, 2007 at 4:40 pm
My wife has about 36k in student loans at 275 interest rate you.
The calculation like this will assume 25 tax bracket 125 so if your interest is fully deductible then you can deduct the calculation like this will assume 25 tax rate you should check on consolidation loan at 275 interest and it comes directly from your highest.
My wife has about 36k in student loans at lower rate.
The calculation like this will assume 25 tax bracket 125 so if your highest tax bracket 125 so if your highest tax bracket 125 so if your interest and it comes directly from your.
January 1st, 2008 at 3:54 am
You never want to pay interest just to get a tax deduction.
Pay it off as soon as possible.
January 4th, 2008 at 2:18 pm
Generally I wouldn’t hold off paying ANY debt just for a tax deduction. In actual refund dollars, a deduction ends up being the amount you pay times your marginal tax rate.
So for example, if you paid $1,000 in student loan interest for 2007 and you are in the 25% tax bracket, you’re “netting” a payment of $750 [1000 - (1000 x 25%)]. In other words, the deduction only gets you back 25% of what you paid.
Personally, I’d rather just be done with the debt altogether and pay it off ASAP.