The #1 Student Loan Landmine to Avoid in 2018
The #1 Student Loan Landmine to Avoid in 2018:
Paying Off Student Loans Without Getting Snared
44.2 Million taxpayers owe more than $1.48 Trillion in student loans for themselves and as guarantors for their children. That’s more than twice as much as all the credit card debt in the Country combined. Even worse, default rates, even measured by very questionable federal estimation methodologies exceed 12%!
But, did you know that the government is the owner of most of these student loans, and both the government and private lenders can seize your tax refund if you are in default on your student loans? Along with all of your other tax planning strategies, you need to keep an eye on your student loan status. You don’t want to do such a good job planning for tax savings that you line up a hefty refund only to have it go to your delinquent student loan interest – unless that is the plan.
Certainly, you have to balance the refund amount you risk losing with the amount of money it would take over the course of the remaining months in the year to pay a modified student loan payment on a consolidated basis and do some calculations. You also may want to put all of your debt on a spreadsheet and compare interest rates before deciding where your money will give you the most bang for your buck. You could also try matching asset classes that “produce interest or dividends” with those for which you have to “pay interest and dividends” and try to cancel out your negative/positive financial leverage categories, adjusting for inflation.
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