Retirement tax questions

I saw a good explanation of this by @dmertz .  When you received the loan, it was tax-free.  You are already repaying the loan from those tax-free dollars, so there is no further tax deduction or reduction.  The interest is coming from your after-tax money, and it is not deductible, but it does go to your credit in the account rather than to a bank, so it benefits you in the long run.