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Posted by Han on September 5, 2008, 2:16 am
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kamlet@panix.com (Arthur Kamlet) wrote in
>>> Jahan wrote:
>>> > I left school this summer. Here is my financial situation.
>>> >
>>> > *Total debt of student loans (including interest) around 40K
>>> > Breakdown of these loans:
>>> > Graduate plus loans 20K @ 8.5% interest rate
>>> > Unsubsidized Stafford Loans 12694 @ 6.8%
>>> > Subsidized Stafford Loans 8,500 @6.8%
>>> >
>>> > *Earnings from work this year 20K
>>> > *Taxes paid 6K (approx.)
>>> >
>>> > *Savings 38K
>>> >
>>> > My question is should I use funds from savings to pay off my grad
>>> > plus loans (higher interest rate). I am thinking of taking off
>>> > 30K from savings to pay off my student loans. If I do so, would I
>>> > still be able to get refund for the taxes I have paid at the time
>>> > of filing my tax returns. What is the best course of action I
>>> > should take to get as much refund as I can. Also I would like to
>>> > pay off my loans so that I don’t accrue too much interest rate.
>>> > Im 27 and single. Don’t have a job yet and am living with my
>>> > parents. And im hoping to get a job in the next 2/3 months. To
>>> > date i have accrued interest in the amount of $2000
>>> >
>>> > Thanks.
>>> >
>>> This newsgroup is devoted to "Taxes." You are asking a financial
>>> question that will generate lots of opinions.
>>>
>>> From a tax perspective and assuming your income doesn't exceed
>>> ~$70,000, your student loan interest is deductible from gross
>>> income even if you do not itemize deductions. See the
>>> instructions for Line 33 of the Form 1040.
>>
>>Note however, that your deduction is limited to $2,500.00 of interest.
>>Therefore, from a tax standpoint, you should pay down the loan to the
>>point where the interest accrued in a year will not exceed $2,500.00.
>
>
>
> That makes some sense if the interest you paid was available as a
> tax credit.
>
>
> Since it is just a reduction of income, it is still a good idea to
> pay down the loan ASAP if you can afford to do so, since the tax
> savings is a small percentage of the interest paid.
I don't know whether this may apply, but through NIH there are programs
that if you work in research, up to $35000 of student loans can be
forgiven per year or per 2-year period (I believe). See
http://www.lrp.nih.gov/
--
Best regards
Han
email address is invalid
--
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