Yeah, yeah, yeah…I’m going to save my excuses. I’ve decided that if I get one post up per week then I am meeting my posting goal.
Saturday, while working university programming, I decided to try and multi-task and get my taxes done during the lulls. My taxes are pretty straight forward and I usually qualify for one of the free tax filing services. Initially, I began my federal filing with TurboTax, as I have the past five years. However, this year, to complete the forms necessary to claim the student loan interest tax deduction, the software prompted me to upgrade to the Deluxe version, which would have cost me $40.00 for my federal tax filing and $40.00 for my state tax filing. Ummmm…no. While I like the TurboTax software, and the ease of having some of my data from the previous year imported, $80.00 seems a bit excessive for such a simple return. It takes me less than an hour to file my taxes and my time is yet to be worth $80.00/hour. So, while I didn’t finish filing my taxes (I found other software that includes the educational tax forms in their free version), I did get close enough to being finished that I noticed the following:
Wow. So, I don’t know how it escaped my notice that in 2019, I paid $8,066.00 in student loan interest. This does NOT include the interest that accumulated on my federal student loans, which did not require payment on the income-based payment plan, and instead CAPITALIZED on my federal student loans. Ugh. Maybe I just didn’t want to notice?
In 2020, the onset of the COVID-19 pandemic significantly lowered interest rates and I only paid $2,519.00 in student loan interest. This was buttressed by the fact that in March 2020, the U.S. federal government created an interest and payment moratorium on federal student loans which meant the only interest that accrued on them, to be subsequently capitalized, is the interest that accrued between January and March 13, 2020.
For the 2020 tax year, the student loan interest tax deduction allows you to deduct up to $2,500.00 in interest paid from your taxable income. For obvious reasons, while not paying any interest is the best, the less you have to pay over $2,500.00 the better. This year, I was very fortunate. $2,519.00 in interest payments is not great by any means, but given the amount of my outstanding student loan debt, it’s not terrible. However, $8,066.00 in 2019 is ridiculous. This is the amount I actually paid to my student loan lenders. Two months of my GROSS income. I worked for two months in 2019 just to service student loan interest. Yea. …a slave to the lender.
I don’t really know what to say. Put in the terms above, I am so incredibly angry with myself, and sad. The most hopeful thing I can say in reflecting on that number is that 2019 is a peak on a downward slope.