Re: Student Loan Payoff? Should I?
09-25-2009 11:13 AM
I make a little more income than the OP and usually get NO tax deduction from my student loan interest. Info here on income limits to qualify for a deduction: Tax Topic 456 Student Loan Interest Deduction In recent years I'd get maybe $30... but if you make too much money like I do now it doesn't count at all. Perhaps you have other tax considerations being married and it does benefit you? At 5% I'd pay that off immediately (or at least faster than currently) and forget about the minimal tax benefits, which I doubt are as beneficial as not paying 5% interest on the loan itself.
My student loan is through US Dept of Education and while they did that whole apply-extra-payment-to-next-month thing and then wouldn't even send a bill if I had enough accumulated from overpaying, once I consolidated I set it up to just deduct a larger amount each month automatically. A couple phone calls took care of it and now it's almost all paid off. It was silly to keep paying $50 a month when my income had gone up considerably in the years since school.
I sold my house this year and no longer have a mortgage either. While I started to worry about not having that interest deduction either (far bigger than a student loan one!), it realized it was silly to have a mortgage JUST for the tax benefit. My dad did take out a small loan on his house after he paid it off to maintain the homeowner exemption and that was slightly in his favor, but overall I'll pay the govt more on taxes and in the meantime have that mortgage payment in my pocket/savings and give more to charity too.