Tax Question: re: Student Loan Payments

[Jurollo]

I believe I already know the answer to this and frankly, if a good accountant wanted to take his time to help me with everything I would be more then willing to pay but here is my question. I have about 40k in student loans (give or take) with about 20k sitting in an ING account for taxes for the year. Between that 20k that is sitting there and a small portion of my bank account and roll I could pay off my student loans right now and get out from under them. The question is this... is there anyway that student loan payments can be processed as tax deductible? Any help is welcome, although I am sure that the answer is no.
~J

[z28dreams]

What interest rate are your student loans at? Were you able to consolidate around 3%?

If so, you'd be crazy to go pay them off all at once. Low interest loans like that should be paid off as slowly as possible.

[Jurollo]

I missed out on 2 low consolidation points, and then had to get private loans via sallie mae that werent able to be consolidated. So I either want a loan from another bank or to just pay them off. The private ones are at like 9% and are 55% of my total loans, others are 4.75%. I have a ton of credit history and a great FICA score so I am thinking I should be able to snag a decent personal loan from a bank if I cant use them as deductions.

[Zag Nutz]

The payment itself will not be tax deductible, you're right.

If you need to get a loan, and you own a home you could get a home equity loan and the interest on that would likely be tax deductible.

I think you have to pay off the 9% loan, and then make a decision on the 4.75%. If you are going to be diligent about investing then I think you let that one go as long as possible. Dave Ramsey and others would tell most people to knock out the debt first because most people are not diligent investors.

[Jurollo]

I dont own a home yet... the goal is to rent for one more year and continue to look for a multi-family unit when I move back east and then start to rent it out while still doing the poker thing.
~J

[Big TR]

TAX ADVICE:
Assuming you are single, you can deduct student loan interest of up to $2,500 per year from your AGI if you make less than $50k. The deduction phases out at $65k. Double the income limits if you are married.

I'm guessing that you make more than $50k since you've got $20k saved up for taxes. So, you are not going to be able to deduct anything.

PERSONAL FINANCIAL PLANNING ADVICE:
Don't hamstring your bankroll to pay off the 9% student loan. Even with good credit, I'm not sure that you will be able to get an un-collateralized personal loan from a bank at a rate better than 9%.

Since you have good credit, you might be able to play credit card roulette. Get a large limit on two cards. Get a check from one company then balance transfer the amount to a low fixed rate card.

[yellowbastard]

[ QUOTE ]
from your AGI

[/ QUOTE ]

Student loan interest is a deduction for AGI as opposed to other deductions that are from AGI and must be greater than the standard deduction to further reduce tax liability.

[Big TR]

Sorry about that typo. You are correct.