Debt How Much of My Student Loans Should I Pay Down Before the End of the Year? Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint.com Published Nov 10, 2018 - [Updated Apr 26, 2021] 3 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. The New Year is almost here! When the end of December finally rolls around, you’ll look back at your year and hopefully, feel like you’ve accomplished something significant – like paying down your student loan debt. But beyond that sense of satisfaction, does it really matter how much of your student loans you pay back before the end of the year? It depends. To start, consider… What Are the Details of Your Student Debt? Every person’s financial situation is different. To understand the best course of action for your debt repayment, you need to know the details of your debt. Start by making a list of your outstanding loan balances, monthly minimum payments and the interest rates for each. If you have student loans with a high-interest rate, (think six percent or more), your debt is likely to cost you more than you might earn by investing extra payments. In which case, paying off your high-interest debt as quickly as possible might be your best bet. If you have lower interest debt, it might make sense to stick to making minimum payments on your loans while investing in vehicles like your retirement account to maximize your returns. Can You Deduct Your Student Loan Interest? You may be able to deduct up to $2,500 in student loan interest on your tax return. But there are a couple of caveats. First, you will need to know your income, adjusted gross income and your student loan payment history for the year. In order to qualify for the full deduction, you need to be making less than $65,000 as a single filer, or less than $135,000 if you’re married filing jointly. The IRS has a quick quiz that can help you determine if you qualify. Note, if you have refinanced your student loan for more than the original amount and used the excess for anything other than educational purposes, you won’t be able to deduct the student loan interest. Are You in a Position to Pay Off More of Your Student Loans Right Now? Take a look at your current monthly expenses and what you have set aside in an emergency fund. If you’re living paycheck to paycheck and don’t have an emergency fund, be wary of going all in on paying off your student loans. You’ll need some emergency cash set aside for unexpected expenses to help avoid taking on high-interest credit card debt if and when something happens, like a medical emergency or your car breaking down, (and trust me, something always happens). You Should Always Be Making (at least) the Minimum Payments In most cases, student loans cannot be discharged in bankruptcy. And ignoring them will only hurt your credit and balloon your balance with added fees and interest. Avoid delinquency and long-term money regrets by making on-time payments now! Go Ahead and Pay ‘em Down! Once you’ve considered all of the factors above, you can decide how aggressively you want to pay down your remaining student loan debt. If what you really need is a little more motivation to help you follow through, imagine what your life will be like once you become debt free. Imagine how you’ll feel and how your life might actually change. Will you be able to finally take that trip you’ve been planning or apply for the mortgage on your first home or just be able to sleep better at night? When you start to lose focus and purpose while working through your debt pay off journey, remember to reconnect with those things – all the things you stand to gain once you become debt free and the feelings of achieving them! This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation. Previous Post Net Operating Income: Why and When You Need It Next Post How to Create a Comprehensive Budget for Your Dream Wedding Written by Mint.com More from Mint.com Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! Retirement 101 5 Things the SECURE 2.0 Act changes about retirement Home Buying 101 What Are Homeowners Association (HOA) Fees and What Do … Financial Planning What Are Tax Deductions and Credits? 20 Ways To Save on… Financial Planning What Is Income Tax and How Is It Calculated? Investing 101 The 15 Best Investments for 2023 Investing 101 How To Buy Stocks: A Beginner’s Guide Investing 101 What Is Real Estate Wholesaling? Life What Is A Brushing Scam? Financial Planning WTFinance: Annuities vs Life Insurance