When you pay principal, you are gaining that much value back as equity. It makes more sense if you think of a loan for something physical like a mortgage. If you pay $100 of principal on your mortgage, that money turns into equity that you own in your home so that when you sell you get that much more (in a simplified way).
You aren’t losing the $100 you pay in principal, it’s just transferring into an asset rather than liquid cash. With a student loan, that asset is your degree/education. It’s a little different than a mortgage because the bank can’t repossess your degree, but the underlying logic is the same.
You could also think of it like paying for your degree on a payment plan. You wouldn’t expect to get a tax writeoff on your couch just because IKEA let you pay in monthly installments.
When you pay principal, you are gaining that much value back as equity. It makes more sense if you think of a loan for something physical like a mortgage. If you pay $100 of principal on your mortgage, that money turns into equity that you own in your home so that when you sell you get that much more (in a simplified way).
You aren’t losing the $100 you pay in principal, it’s just transferring into an asset rather than liquid cash. With a student loan, that asset is your degree/education. It’s a little different than a mortgage because the bank can’t repossess your degree, but the underlying logic is the same.
You could also think of it like paying for your degree on a payment plan. You wouldn’t expect to get a tax writeoff on your couch just because IKEA let you pay in monthly installments.