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That’s between you and the lender. You can only deduct interest you pay. Normally, I would think it is better to reduce your principal than to pay interest, since that more directly reduces your number of remaining payments. However, if you can get the lender to change the treatment of your payments so that you are considered to pay interest, and issue you a 1098-E, then you could deduct the interest.
Also be aware that if married filing separately, you can’t deduct student loan interest at all, and there is an income phase out between 65,000 and $90,000 of annual income. So don’t go to the trouble of re-characterizing your payments if it will turn out that you can’t deduct the interest anyway.
That’s between you and the lender. You can only deduct interest you pay. Normally, I would think it is better to reduce your principal than to pay interest, since that more directly reduces your number of remaining payments. However, if you can get the lender to change the treatment of your payments so that you are considered to pay interest, and issue you a 1098-E, then you could deduct the interest.
Also be aware that if married filing separately, you can’t deduct student loan interest at all, and there is an income phase out between 65,000 and $90,000 of annual income. So don’t go to the trouble of re-characterizing your payments if it will turn out that you can’t deduct the interest anyway.
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