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I like the idea of student laon payments being tax free, not so much the idea of it coming out of my 401k, that needs to stay where it is.
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I guess you would. I would like everything I do to be tax free.
So tell me why they should be?
Here's a scenario (true story):
I am a high school student. I want to go to college. I get a job and put at least half of everything I earn in to a savings account.
I graduate high school. I buy a crappy car for cash. I enroll and start college. I continue working. I write a check for my tuition. I write a check for my books. I write a check every month for rent. I pay for all of of my living expenses with after tax money.
Five years later I graduate college debt free. I start making real money. I pay quite a bit more in taxes.
Why in the world should you get to pay your deferred cost of college (the loan) tax free at a time that you are earning multiples of what I was earning when I paid tax on it as I was doing it?
You don't get a special reward for making the bad decision of borrowing for your education at the cost of those who busted their rear to avoid that debt in the first place.