JackHammer

So I'm going to grad school part time and was wondering if I should take out a loan. I can afford the tuition because I work plus my comp reimburses me partially after each semester. I am being taxed like crazy and was wondering if taking out a loan is worth it to lower my taxable income. Any suggestions?

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gear02

I think if you can afford it, don't take a loan. The only way a education loan is tax deductible is with its interest, and I think you'd pay more interest than tax savings.

But you can write off education expenses from your taxes. You can take the Lifetime Learning Credit (http://www.irs.gov/individuals/artic...=96273,00.html) and tuition and fees (http://www.irs.gov/taxtopics/tc457.html). That's two deductions right there.

brainsmile

nice

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VTGreg

If you are looking at taking out a loan to just lower your taxable income then I would avoid it. However, if you are planning on making a major purchase (i.e. car) you could use that money at an interest rate that is probably going to be considerably lower than what you could get from a bank.

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speedracer120

Except that violates stipulations on most loan agreements.

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Cubsfan

I think he meant:

Loan Money --> Pays for School
Money that used to be paying for School --> Pays for car

speedracer120

Gotcha. Still 10AM and no coffee as of yet for me.

gear02

i've been keeping quiet over the loan for paying other things since I'm not too familiar with all the private loans out there. However, I'll speak about the MBA loans. From my experience, MBA loans work not by granting the money you ask, but actually giving you the amount that the school certifies. Strange? Yes.

The school sets a budget (you've probably seen them on financial aid websites). However with these MBA loans, this budget is king. The school's financial aid office will determine via your FAFSA what federal (subsidized and unsubsized) loans you can receive. After that, it'll only certify the difference between the budget and the federal loans (assuming you're not paying any cash).

So basically, you can only get as much loans as the school's budget. I'm not sure if this applies to most grad school loans, or just Sallie Mae's MBA Loans.

JackHammer

I looked into this this past feb when I was doing mytxes. THe LLC and the tuition and fees are only for people making under a certain amount. Once you are over this amount you don[t qualify, right?


Also since my company does reimburse me, I don't qualitfy.

"You cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance."