<prompt> Human: I have paid all my credit card debt about 8k and my wifes credit card debt about 1.5k. We have an emergency fund set up and the only thing we have to pay is her student loan: almost 30k.I want to start investing. My question is: if student loan interest is deductible, wouldnt it make more sense to invest the money instead and making payments on the student loan as we go? I feel like the money invested could be gaining returns, since the interest we pay for the student loan will be deducted anyway.Please correct me if Im wrong or if I have the wrong idea about what deductible interest means.Thanks in advance!Assistant: This falls into the same fallacy as buying a home you cant afford for the mortgage interest deduction. Sure, you could get higher returns elsewhere, but theres no guarantee. In contrast, payments on your student loans are a guaranteed return at whatever interest rate your loans currently have, minus the amount you save on your taxes.If your student loans have a high interest rate 4 you should focus on that first, the exception being if your employer matches any of your 401k contributions. Human: With the 401k or, better yet, TSP, what about taxes?That is, if i contribute more to my 401k, I get an immediate tax savings. In the 25 marginal tax rate case, is it still better to pay off student debt?Assistant: It seems like savings now, but remember you wont save 25 in taxes for 401kTSP contributions - youre only deferring those taxes possibly to a lower rate, but certainly some rate above 0, and it could be very possible you pay more that 25 in retirement. And deferring taxes is not a money-saving strategy. As c2reason states, paying 1,000 to save 250 still means youre out 750. To decide whats best, go by interest rates, not what gets you the largest deduction.Anyway, for your original question, I always treated interest-deductible loans as a simple loan but with a lower rate. If your student loan is 6, but youre able to write off all the interest each year, treat it like a 4.5 loan and treat the investment vs payoff question that way as in, you are more likely to get 4.5 in investments, so its more likely that will be more profitable to you.Human: I like your point of view because you explained it simply and briefly. Another option Ive been thinking of: continue with minimum payments on the student loans and save the rest to negotiate a large payoff. Example: offer 75 of 30k all at once. Do you think that could work?In other words, can I negotiate a student loan?  <response>: You wont be able to negotiate a student loan, because they are backed in full by the federal government and their internal collections agencies, whom will guarantee they get your money even if they have to garnish your Social Security income until the day you die. You can negotiate debts that you could forfeit with bankruptcy, where the creditor is faced with a get 50 or get 0 type of decision. With student loan debt, the question is only, Is the creditor or the government going to get 100, because theyll get it no matter what. 