topic Re: Student Loans vs. HELOC ? in Student Loans

Student Loans vs. HELOC ?

Sk323i — Mon, 26 Feb 2024 07:13:46 GMT

I have 60K cash

I have 59K in students loans at 4.2%

I have 59K in HELOC at 8%

What is better to pay off given taxes, and depreciations, and capitalized interest, etc. ?

Re: Student Loans vs. HELOC ?

Horseshoez — Mon, 26 Feb 2024 12:29:39 GMT

@Sk323i wrote:
I have 60K cash

I have 59K in students loans at 4.2%
I have 59K in HELOC at 8%

What is better to pay off given taxes, and depreciations, and capitalized interest, etc. ?

Assuming your marginal tax rate is up in the 20% range, and without running the numbers, my gut tells me you'd be better off paying off the student loans.

Re: Student Loans vs. HELOC ?

Sk323i — Mon, 26 Feb 2024 17:27:09 GMT

What's the correct way to look at this though ? Instead of gut feeling ?

Re: Student Loans vs. HELOC ?

Horseshoez — Mon, 26 Feb 2024 17:36:12 GMT

@Sk323i wrote:
What's the correct way to look at this though ? Instead of gut feeling ?

In your shoes, I'd look at your tax return for 2023; how much of a deduction did you get for your HELOC interest and then equate that to how large the reduction was on the taxes you needed to pay for both Federal and State (if applicable). If the reduction in taxes was larger than the interest you paid on the student loans, then pay them off, if it wasn't then pay off the HELOC.

Re: Student Loans vs. HELOC ?

Shooting-For-800 — Tue, 27 Feb 2024 03:23:09 GMT

I would not pay either at one time.

Maybe $2k each every month for the next 15 months or so for cash flow.

If not, I would bank a year of SL payments and apply the rest to HELOC.

JMO.

Re: Student Loans vs. HELOC ?

pizzadude — Tue, 27 Feb 2024 23:14:00 GMT

@Sk323i wrote:
I have 60K cash

I have 59K in students loans at 4.2%
I have 59K in HELOC at 8%

What is better to pay off given taxes, and depreciations, and capitalized interest, etc. ?

Did you meet income requirements to be claim maximum student loan deductions in past years ? I think the highest deduction for this is $2.5K.