Tax Savings from Subsidized and Unsubsidized Loans

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Are you aware of the tax deductions on federal loan interest?

Tax Savings from Subsidized and Unsubsidized Loans

You can save money by maximizing the amount of subsidized student loans you take out before turning to unsubsidized loans. This doesn't mean, however, that you cannot still save money on the unsubsidized loans you have borrowed.

The interest that accrues on the loan while you are in school can be used in your favor. If you make payments every month to cover the interest as it builds, that money can be used as a deduction when filing your tax return at the end of the year.

Once you enter repayment on your subsidized student loans you can claim the interest on them as a tax deduction too. Obviously, the less interest you are responsible for the better. That is why subsidized loans are preferable.

By making interest payments on both types of loans and claiming them on your taxes, it lessens the burden that interest rates can place on you. So whether you have subsidized, unsubsidized student loans or both, there are ways to save a little money and make getting out of debt easier.



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