<p>I am feeling conflicted about this. We had our kids take out the loans that they could in undergrad. For many reasons, one being we were committed to paying for their undergrad and also because the kids did what they could to pay when they were in school and they graduated in 8 semesters,we are paying those loans off. So the kids received their undergrad without debt, we assumed their direct loans. But they are in their names, they get the interest deduction and they are building credit. We are happy to do this and it was always our intent. </p>
<p>I was entering information for one of the kids tax return (I offered and they were happy to have me do their taxes). I found that they are getting $600 back because of interest I paid on their student loans. </p>
<p>If the kid offered to give me the $600 they are getting back on the interest paid on student loans, would you accept it? I would turn around and pay it towards the loan. Or would you say no and let them keep it? If it matters kid makes plenty of money and is saving a good amount each month and fully funding their 401k. </p>
<p>First, DID your kid offer? If so, why not accept it and use it to pay towards the loan? Why are you conflicted? If your kid has a good job and isn’t hurting for money, it seems like a good thing to do with that money.</p>
<p>Not only would I use the $$ to pay towards the loan, if offered … I WOULD at least talk to the kid about that item to be sure they knew they got it , why they got it, and after a beat of silence ASK for the $$ if they didn’t offer.
If my kid was not employed or was struggling, then I would skip the asking part. Sometimes college graduates are still learning about money and where it comes from, seriously. At least mine are. YMMV</p>
<p>Thanks for the replies. She did offer me the tax return, which I knew she would but in a sort of kidding way. I told her that would be great and that I was going to use it to pay down the loan. </p>
<p>I would invite my child and his or her checkbook over to look at the return. Hopefully they would see, as your daughter did, that they shouldn’t profit from their parent’s willingness to assume debt to pay for their education. The check would go toward principal on the loan. Win-win for everyone.<br>
The idea would be addressed anew each year, since life and taxes do change.</p>
<p>Duh. Of course this goes to pay down the loan! </p>
<p>Just like any difference between what your taxes would have been without the AOC credit, and what they end up being with the AOC credit, should be headed straight into the next year’s college fund.</p>
<p>I know, I know. I had no idea. I don’t do the oldest tax return and he’s a disorganized mess so I didn’t know if he tried to use this interest deduction ( or whatever it’s called). I did send him the 1098 that I printed out, they send out emails. </p>
<p>But this year my other kid and I were talking and I offered to do her taxes, this is her first year post college. I use turbo tax and can do something like 5 returns on my software. Anyways on turbotax it shows you what you are getting back as you enter things. Low and behold when I entered interest paid on student loans her tax return jumped up $600! I had no idea, she doesn’t own a home or have any other deductions but it looks like student loan interest can be added no matter what else you have. </p>
<p>It was a happy surprise. </p>
<p>I’m also happy to find that everyone is in agreement. We will use the money to pay down those loans. </p>
<p>I didn’t realize interest on student loans was deductible. It looks like a nice benefit. (Please refer to “refund” not “return” I do a mental “pause/restart” every time I see “return” used in place of “refund”) I found this explanation on the IRS website, so you don’t have to itemize, and as the OP found, you can easily isolate the effect (and value) of the student loan interest deduction.</p>
I do a mental “pause/restart” every time I see “return” used in place of “refund”) I found this explanation on the IRS website, so you don’t have to itemize, and as the OP found, you can easily isolate the effect (and value) of the student loan interest deduction.</p>