Hi all,

Through a very generous gift from my grandmother (split of right before and after the 2012 new year to avoid gift tax), I received $26,000 which I used to pay off my college loans (around $24,500) prior to the end of my grace period, so paid-in-full without any interest or early payment penalty.

Is there any way I can use this to my benefit when working on my tax return?

Thanks in advance.

Sorry, but no. Payment of the student loans without any interest payment is in no way deductible.

The fact hat you paid off your loan doesn't by itself give you any specific tax benefits. Of course you may be eleigible for tax benefits under the Lifetime Learning Credit or the American Opportunity (Hope) Credit, depending on your enrollment in school, educational expenses, and income in 2012, but again - these credits have nothing to do with the loan you paid off.