Making a payment on your loans with money that you've already paid taxes on hits your income harder than it would if you were able to pay with pre-tax money. You're already paying interest on your loans, but you're also paying taxes on the money used to pay off your loans. For illustration: If you were paying $10,000/yr in student loan payments and you had a total income tax (fed and state) of 20%, you'd be spending $12,000/yr of your income to pay that $10,000... an extra $2,000/yr. If you were able to pay with pre-tax money, you'd only be spending $10,000/yr to pay that $10,000. You may even drop in to a lower income tax bracket which could leave you with even more money to work with. Allow students to pay back their loan debt with pre-tax money! Help to further alleviate their burden.



