Increase the Student Loan Deduction Amount

I recently wrote a post on making sure to take your student loan tax deduction and now I’m going to be writing what is somewhat of a follow-up post. Recently one of my friends showed me a link to a petition on whitehouse.gov. Now I know that online petitions are usually not very effective, and they require little effort to complete. At least we know that if the petitions on the white house website hit a certain threshold someone will at least have to respond to it which is more than you can say with most online petions. You can sign up for the petition to increase the maximum deduction past $2,500 by clicking here.

While I don’t think that anything will actually come directly from this petition, I think it would be a great way to create awareness and an easy way to put this issue out in front of the public. To me I see this as a no-brainer way to help out students with large amounts of student loan debt and a simple fix that doesn’t really hurt anyone – it would become more like the mortgage interest deduction. Even doubling the limit or increasing it by $1,000 would be a huge benefit and cover probably 90% of people with student loan interest.

If we figure that the average student loan debt hit $29,400 in December and we use the 6.8% interest rate, that is almost $2000 in interest for the year. Since that is only the average, there has to be a significant amount of people above the average that are paying over the $2,500 in student loan interest deduction cap. Wouldn’t it be nice if these graduates could deduct all of that interest in the same way that people are able to deduct mortgage interest from their taxable income?

And that’s not even factoring in people who are paying higher interest rates (like me!) reaching upwards of 8%, which compounds the amount of interest paid even more. Just because they might not have a huge amount of student loans it’s the interest rate that really hurts you. So please take a few minutes out of your time to sign the petition and tell anyone you know that could benefit from this change. It’s a pretty simple process and you never know if you could contribute to a big difference.

How do you feel about the current student loan interest deduction being capped at $2,500? Also, have you ever been a part of a successful White House petition?

photo credit: Images_of_Money via photopin cc

4 thoughts on “Increase the Student Loan Deduction Amount

  1. I would have no problem with raising it, as most of the former students paying it off are likely in a lower tax bracket as it is when they begin paying. Of course, anything that reduces governmental revenue would likely require some sort of increase to offset it.

    • I agree with you, that’s the problem I always have when thinking about things like this. The money does have to come from somewhere else or be subtracted from somewhere else. I think we can find a few dollars to cut out off Congress’ budget though 😉

  2. And then today they announce free community college. I’ve been screaming from the rooftops about increasing the deduction. On the same plan you are,125k down in 34 months. 100k to go.

    • Yeah, it will be interesting to see what exactly happens with the free community college. I think it’s a step in the right direction but haven’t looked into the details on how it will be funded.

      Increasing the deduction would help people with large loan burdens that are paying back their loan. Imagine how much extra doctors, etc could save if they even just doubled the deduction to $5000.

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