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One ray of hope in the great student loan farce is House Resolution 436 which is a bill being introduced in Congress by Reps. Phil English(R-PA) and Kenny Hulshof (R-MO). The new legislation would allow any student loan payment to be deducted. I know that we have some form of limited student loan deduction now ( but not after making 40,000 for you single people out there and 60,000 for us married) 436 would move those limits up allowing you to make 100,000 for single filers and 150,000 for us married. That means you could actually earn a living and still get a deduction. Also, 436 would allow a higher limit for the maximum you can deduct (current max deduction is 2,500) and allow you to take the deduction for as long as you are paying on the loan (current time limit is 60 months)
So in short all I can say is GO 436. I hope it passes for all of us getting pounded by student loans.
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That's great! I was just saying to a coworker on Friday, that if the new Section 529 plans allow people to withdraw money tax free to pay for education, then why isn't my entire student loan payment (principal and interest) allowed to be deducted from my federal taxes?

It's the same difference if they can take it out tax free, I should be able to pay it down tax free too.

Thank you very much for that post. I didn't know there were more Congress members out there looking out for us.
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http://thomas.loc.gov/cgi-bin/query/C?c107:./temp/~c107nT2lgO

This is HR 436 (if the link works)

Dang! I'm not seeing anything about principal and interest, only interest . . .

A change like this was essentially incorporated into the 2001 tax act (Economic Growth and Relief and Fairness And All That Tax Act of 2001). The new limit phases out at $50k for single and $100k for couples. They kept the $2500 cap.

At the start of a loan (esp. 30 year one), most of the payment is interest anyway, but ideally, there should be the full deduction of the payment. Alternatively, I should be allowed to save in a Section 529 account, and apply the gain tax free to an outstanding loan balance. That's the deal the Section 529 savers are getting on tuition now, so why should their tuition payments be tax free and mine can't?
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