- our only debt is $45k in student loans at 2.75% (payment is $315 month, so a maximum of 15 years and $10k of interest left. Using the student loan tax deduction, this insterest is reduced to about $7500 over those 15 years, so an effective interest rate of around 2.2%. I think I did that math right, but correct me if I'm wrong!)

Okay, checking your math! I think you're off a bit.

- The difference between a deduction and a credit. A credit would give you $2,500 off your entire final tax bill dollar-for-dollar. A deduction removes only part of your taxable income from eligibility for taxation, and the amount you get back is dependent on where your income falls across the tax brackets. $72K filing jointly puts you on the border of the 15%-25% brackets. With the standard deduction, you'll be down to the 15% bracket. This just means that $2500 of your income won't be taxed at 15%. You only get $2500 x .15 = $375.

- Because this is a fixed-payment loan, the amount of interest one pays each month decreases. Right now, based on the numbers you gave ($45000 in principal, with 2.75% interest and a $315 payment), I think you're only paying $103 in interest per payment. This year, if I'm using Excel correctly, you've only paid about $1300 in interest, so you'll owe Uncle Sam $180 less. In the far future, say year 14, you'll pay the last ~$65 in interest for $10 off your taxes. Your cumulative interest paid on this loan will be about $10,000, but your tax savings will be less than $1500, with most of that coming to you in the next six years. Your effective interest rate is like 2.3375%.

- If your income goes up in the future past $125K, the deduction is prorated, so it's an even worse deal.

That said...

- Not sure if your "after tax" income is your take-home pay or not; if your gross is higher than I'm thinking, then some or all of the deduction could wind up in the 25% bracket, at which you actually are getting $2500 total over the course of the fifteen years.

- Still, this is a SUPER LOW rate. An investment of $45K over the same fifteen years would get you a lot more than what you'll spend on interest--a 5% rate would get you to $93K before taxes.

- If you want to see how paying down the loan would affect the total interest, take a look at this loan interest calculator:

http://asksasha.com/loan-interest-calculator.html