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An open letter on student loan interest

Recently it came to my attention that student loan interest is not completely deductible. This rather infuriated me, so I wrote to my elected officials using information I found on the USA.gov website. If you are interested in contacting your officials, or interested in why I felt this way, you can read my letter below.

These are trying economic times. I certainly understand the desire to get the housing market moving again, in an effort to stem sliding home values sending more individuals under water.

However, what I fail to understand is how on the one hand we can try to help people take on more debt who inevitably will have their purchasing power reduced by it, and do nothing to aid individuals who are already in debt who could easily have their purchasing power increased.

Essentially 100% of home mortgage interest has been made tax deductible over time. Currently, only up to $2500 worth of student loan interest is tax deductible. Considering that your average doctor, lawyer or engineer is leaving college saddled with over one hundred thousand dollars (yes, $100,000) in student loan debt, even at a relatively low interest rate, the yearly interest payment is significant.

Now, of what value is it to someone who is already hundreds of thousands of dollars in debt and paying interest to provide a tax break for an additional multi-hundred thousand dollar purchase of a home?  In fact, even if mortgage interest wasn’t deductible, for these indebted former students, the tax deduction of student loan interest could provide significant returns towards the purchase of a home.

It pains me to know that some of the most productive and creative members of our society are buried in debt that they have trouble repaying, which pulls countless dollars out of their pockets that they could be putting back into the economy.  At the same time, thousands of low- and middle-income blue-collar workers are trying to buy bigger homes simply because they can afford it due to the mortgage interest tax deduction.  Additionally, while the current administration explores the possibility of instituting new legislation allowing for cram-downs of failing mortgages, student loan interest remains one form of debt that is nary untouchable by any means save death.

For a country in such financial crisis, it seems almost criminal to not aid those who could most easily jump start the economy – our most intellectual resources.  It is refreshing to see that the administration is looking at aiding the organizations that provide student loans to keep people headed towards further education.  However, the simple economics behind expanding the student loan interest deduction are sound.  And the benefit to the economy and the financial system will likely far outweigh the small penalty to the budget.

Welcome back!

So after quite a hiatus I have finally just decided to start over from scratch.  My old blog is still availabale to close friends and family who feel like really going through all of the old stuff there, but this one will be a much cleaner, more sanitary, work-friendly, technology-and-me-and-you-and-other-miscellaneous-nonsense blog.  Great, another one of those.

So, for those who used to follow regularly, welcome back.  For those who never did, welcome.  For those who don’t care, that’s just too bad, because I’ll make you care.  In fact, I’ll make you care so hard you cry.

I will likely add in some selective posts from the old blog… so, if you were a reader, you might find some stuff you saw before.  Tough!