Another Thousand Knocked Off My Student Loan Debt – Down to $28 Thousand

And… we’re back! Or I should say that “I’m back,” but whatever. After a little over a month and a half I’m glad to be back with another student loan reduction update. This time around, I’m glad to report that my student loan has dropped from $29 thousand to $28 thousand which, all things considered, isn’t so bad. Sure, I would have rather taken that $5 thousand down payment that I put on my new truck and that nearly $4 thousand that I just paid to the government and use it to reduce my student loan balance so I could happily report right now that my student loan debt broke beneath the $20 thousand barrier all the way down to $19 thousand, but what can you do, right?

However, like I’ve written on here in the past – I’m not annoyed that I had to spend all of that money on buying a new car and paying my taxes because the new car means that I’m finally riding around in a comfortable, safe vehicle and having to pay taxes means that I’m making more money overall. And no one can really be too upset when they’re safer, more comfortable, and making more money.

I do think that I’m in a somewhat “lost” category of taxpayers when it comes to my required payment, though. You see, I took out a ton of student loans to go to college, graduate school, and pay for living expenses. Well, in all of its wisdom the government created a student loan interest tax deduction so that if a taxpayer paid a bunch of money in student loan interest, then they could at least reduce the total amount of their taxable income to reflect the economic impact of having to pay that interest. In some ways, it’s very similar to the home mortgage interest tax deduction.

What’s interesting about my situation is that yes – I did earn a few more bucks in 2011 and thus had to pay more in taxes. Sure, no denying it at all and I’m not looking to deny it. However, unlike other folks who earned more money last year, I didn’t sock that money away into some account or invest it in the market. Nope. Instead, I gave all of that excess income to the government to pay down my student loans!

Do you get the ridiculous paradox that I’m caught in here?

I earned more money, gave that money to the government to pay down my student loans, but because I earned more money in the first place, the government wants more of my money in taxes (and that “more of my money” doesn’t exist… because I already gave it the government!). Do you see the absolutely outlandish situation that I’m caught in here?!

Anyway, since this is the only thing that has been on the student loan section of my mind for the last few weeks I thought I would share with you good people. And there you have it. I gave the government all of my excess income last year and – simply because I earned excess income and gave it to the government – the government has now come back and demanded even more of my money by this Tuesday. Unbelievable.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. Since I started repaying my student loans in July 2006, I’ve repaid a total of $92 thousand in principal to various lenders including the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank. I currently owe $28 thousand in principal to the United States Department of Education’s Direct Loans program. To date, I’ve repaid well over $30 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.