Rating: +0

Excellent Question.
While every person is different as we cannot possibly know each student and parent's situation, most experts recommend that from a financing standpoint, its usually better to consolidate your student loan, refinance your mortgage and pay down/off the student loan when you are financially able. Here are some quick steps to analyze your situation to determine the best solution.

1. Know thy Rates: Caps on student loans are determined every July 1st. The current cap is at 8.25%. While nobody can predict what the rates will do this July 1, 2007, many experts predict the rates will go up nominally July 1st. Compare your mortgage interest rates with your student loan rate. When consolidating a student loan, the formula for consolidation is as follows:

Take the "weighted" average of the student loan rounded up to the nearest 1/8th. This is the fixed rate for the life of the loan. If the weighted average of the loan exceeds the cap, then the rate will automatically default to the published cap for the life of the loan.

2. Know thy Taxes: Mortgage interest is tax deductible on your annual income tax return, but so is the interest on a student loan. However, mortgage loan principal is not deductible but the student loan tuition (principal on student loans) is deductible within the tax year.

SEE IRS HOPE CREDIT or your CPA for details.