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Tax benefit for paying interest on Staffords while in school.

Discussion in 'Financial Aid' started by tacojohn, Jul 25, 2006.

  1. tacojohn

    tacojohn Membership Revoked

    Jun 28, 2006
    Likes Received:
    Does it make sense to pay the interest on nonsubsidized stafford loans while still in school? My spouse works so if we paid the interest would we then be able to deduct the value of the interest payments from our income taxes? Thus while we would pay money in interest payments, this would be offset by the tax savings - up to whatever the maximum the ($2500?) IRS allows you to deduct of course. I realize the best thing would be to use that money to pay tuition rather than borrow but seeing as how my tuition is almost as much as her anual income, we can't contribute significantly to the actual cost of education right now but could probably afford to pay some of the interest if we could reclaim it on our tax returns.

    Or am I missing something here?
  2. gator1210

    gator1210 Senior Member
    5+ Year Member

    Nov 12, 2005
    Likes Received:
    Pay the interest. My dad specifically told me the main reason he is helping me with tuition is the the tax break.

    If you can get by with paying the interest, do it.

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