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Me, whining: Then why do they bother to say that you can deduct loan origination fees? I mean, by definition don't they come at the beginning of the loan?

Phil: I don't know. Do they? If you were required to pay the origination fee at the beginning of the loan, it seems to me it would be deductible when paid. Note that there is no forebearance, and there's just 1 month counted against your 60. If, however, the origination fee is capitalized and need not be paid until the period of forebearance ends, then payment at the beginning would be voluntary and not deductible unless paid 1/1/2002 or later.

Phil Marti

Yep, they took the fee right off the top and sent me a check for my loan amount minus the fee. There was no option to pay it later.

Here's the applicable paragraph from Pub 970:

"Include as interest. Loan origination fees (other than fees for services) and capitalized interest are student loan interest if all other requirements are met.
Loan origination fees. These are the costs of getting the loan.
Capitalized interest. This is unpaid interest on a student loan that is added by the lender to the outstanding
principal balance of the loan."

I meet all the requirements that they list. (Not a dependent, etc.)

I'd obviously like to deduct this since it was paid this year and this is the year that I have taxes to deduct it from. Plus it was a chunk o' cash.


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