The interest on your student loans should be tax deductable for at least five years, even if you dont itemize. Before you put into action any agressive plan to pay off your student loan, verify the tax advantages.


The loans are interest-tax-deductible for 3 more years. Tax-deduction is not enough of a rationale for me to keep paying lots of interest. I probably will have paid in the neighborhood of $1300 this year in interest for the loans.

Not that 8% is as bad as consumer loans/cards, but why pay interest when I can avoid it through some LBYM and debt-reduction strategy.

I actually decided to take a 3rd course of action I didn't previously mention: not open a Roth IRA and don't max out my 401k yet. I plan putting all additional cash towards the student loans, paying them off in about 21 months.

At that point in 2002, I will open a Roth IRA and begin maxing out my 401k until I retire. Any raises or windfalls will go towards the student loans, and if I can start investing sooner than 21 months all the better. I'm only 25, so waiting until I'm 27 or so to max out my 401k/Roth isn't terrible IMO.

-H