Dear Judy,
I'm more worried about you having a mortgage payment well into your 70s than I am about you losing valuable student loan interest deductions. That said, assuming you can fully use the mortgage interest deduction on your income taxes, the cash-out refinancing that you want to do to restructure your debt would still generate a tax deduction.
You get a bigger tax deduction when you pay 7 percent interest than when you pay 3.5 percent interest, but what you're really interested in is comparing the effective after-tax rate. Bankrate has a mortgage tax-deduction calculator that will help you calculate your effective interest rate on the cash-out refinancing.
I don't have to tell you that financing four children's college educations is an expensive proposition. In combining the money you borrow to finance college costs and your mortgage balance, the goal should be to minimize the total after-tax interest expense.
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