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I think that the psychological burden of the debt sometimes outweighs the tax burden of cashing in the account for certain individuals. You sound as though you fit this description.

That being said, you mention that it'll take you two to three years before attaining the nursing degree. Knowing that the nursing field is badly in need of people, it's logical to assume that your earnings will kick into high gear. My vote would be to wait the short-term out if at all possible, and pay off the debt when the earnings kick in. In the mean time, you may be able to reduce your interest rates by talking to your creditors, assuming your payments are current. You've probably already thought of this though. All in all I wouldn't lay awake at night worrying about the taxes if you'll feel better paying down the debt now.

You also mention that you'll be taking federal student loans. Remember, that interest paid on the loans are deductable if paid during the first 60 months from the date payments are required to begin, so that's some help. You're adjusted gross income must be between 40k and 50k if filing single, higher if filing a joint return.
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