All the talk about student loans got me thinking...

Should I work towards paying them off as fas as I can?

or

Should I let them ride as long as I can?

I've been looking at the interwebs and it seems that there are many people in favor of both.

One thing I read is that only $2,500 of student loan interest is deductible a year. However, the IRS website doesn't talk about a cap on student loan interest (http://www.irs.gov/taxtopics/tc456.html). So I'm really not sure.

I know that I have some loans that, when they are due for repayment, will be totally interest payments first (since interest accrued during deferment).

What do the wise financiers of AZine think?

 

I think the choice depends on your complete financial situation.(ie. Income, other loans, want to buy a house, etc.)

What's the interest on this thing and how long would it take you to pay off the loan if you didn't make any extra payments? What % of your monthly income do you expect this payment to take up?

Don't fall for the "It's good to have some deductions" line of thinking. Paying the bank $5k a year in interest so that you can get back $1k on your 1040 does not compute.

 

^ Set your priorities.

Your priorities, as far as repaying debts, should be set up with the highest interest rates first. Pay those off, and then snowball the payments into the next lowest priority, until all your debts are paid off.

I did this, and unfortunately, I have to pay off my mortgage first before I think about adding money onto my student loan payment. Interest for me is only about 1.7% on my student loan, whereas my mortgage was 6.625% Unfortunately, I have a good job, am current on payments, and are upside down on some portion of my mortgage, so the banks can't help us

 

it's like the people who say don't pay off your mortgage. You don't want to lose the deduction.

My school of thought it pay it off as soon as possible. If you're young, get it out of the way so it doesn't haunt you later in life.

My wife paid off $60K worth of grad school debt the first year we were married and we've never regretted what we could have done with the money.

 

There are scenarios, especially if you are rich/older, where it might night make sense to not pay off your mortgage:

ie: http://www.businessweek.com/magazine...6/b4020112.htm

 

It's hard to say without knowing your financial situation better, but I would say you should be asking if it's better to pay it off quickly or very quickly

But if you have $15K of credit card debt at 23%, then that should be your priority.

 

I was referring to people who think that they're saving money (in the form of a tax writeoff) by not paying off their mortgage.

It's all about being balanced (investments, savings, debt).

 

i'd pay off any debts 1st, but investing and paying debts is a fine balance.

 

The only "bad" debt I have is a loan from when I bought my bed and bed set. It's interest free for 3 years, and I've calculated monthly payments out so that it'll be paid off a month or two before interest sets in.

I have a mortgage, which is 5.8%

All of my federal student loans are a mixture of 5.8% or 6.8%. I have three private student loans. Two are 4.7%, the other is 13%(!). I'm working on paying off the 13% loan now.

As it stands now, estimated student loan payments would consume roughly 20% of my current take-home pay. This is if I don't do anything now.

So, from the way it sounds, I should treat the student loans like any other debt and include them when knocking down debt by interest rate.

 

 

I don't know if this has been brought up or answered in any of the student loan or 'doing my taxes' threads, but I could have sworn I asked this question and the answer from the forum was no.

http://finance.yahoo.com/news/the-mo...eductions.html

My parents are paying student loans for me, so I can deduct them when doing my taxes. I had no idea.