Student Loan Interest
Interest payments made on a qualified student loan may be deductible, even if you do not itemize deductions.
The maximum amount of student loan interest that can be deducted is $2,500.
Qualified Student Loan
A qualified student loan is a loan you took out to pay qualified higher education expenses. The expenses must meet these conditions:
- The expenses were for you, your spouse or a person who was your dependent when the loan originated.
- You paid or incurred the expenses within a reasonable period of time before or after you took out the loan.
- The expenses were for education furnished during an academic period when the recipient was an eligible student.
A qualified student must have been enrolled in a degree, certificate or other program leading to a recognized educational credential. The educational institution must be eligible and the student must have carried at least one-half of a normal full-time workload for the course being studied.
Qualified higher education expenses are the costs of attending an eligible educational institution, including graduate school:
- Tuition and fees
- An allowance for room and board
- An allowance for books, supplies, transportation and miscellaneous expenses
An eligible educational institution is a college, university, vocational school or other post-secondary educational institution eligible to participate in a student aid program administered by the Department of Education.
Costs incurred for eligible expenses must be reduced by:
- Non-taxable employer-provided educational assistance
- Non-taxable distributions from a Coverdell education savings program
- Non-taxable distributions from a qualified tuition program (QTP)
- U.S. Savings Bond interest that is non-taxable
- Non-taxable portions or scholarships and fellowships
- Veterans' education assistance
- Any other non-taxable payments received for educational expenses
You cannot claim the deduction if any of these are true:
- Another taxpayer claims an exemption for you as a dependent.
- Your filing status is married filing separately.
- You are not legally obligated to make payments on the loan.
The amount of the student loan interest deduction is reduced or eliminated if your modified adjusted gross income (MAGI) exceeds limits based on your filing status.
If your filing status is married filing jointly the credit is reduced when your MAGI exceeds $120,000 and is eliminated when your MAGI is greater than $150,000.
If your filing status is any other qualified filing status besides married filing jointly, the credit is gradually reduced when your MAGI exceeds $60,000 and is eliminated when your MAGI is greater than $75,000.
For more information see IRS Publication 970.