Is My Student Loan Tax Deductible?

Education Young woman with earphone studying on library.

The article below is up to date based on the latest tax laws. It is accurate for your 2019 taxes (filed in 2020) and 2018 taxes, which should be filed by the April 15th, 2019 (or October 2019 with filed extension) deadline. 

Student loans have become a tremendous burden for many young adults and parents today. With college costs skyrocketing and little hope to cover tuition without borrowing funds in some fashion, getting stuck with those student loan payments is almost certainly a fact of life after graduation. Even though you can’t escape the payments, are there any tax breaks that ease the burden of student loans?

Luckily, taxpayers who make student loan payments on a qualified student loan may be able to get some relief if the loan they took out solely paid for higher education.

In many cases, the interest portion of your student loan payments during the tax year is tax-deductible. Your tax deduction is limited to interest up to $2,500, or the amount of interest you actually paid, whichever amount is less. As with most tax credits and deductions, there are limits in place.

You can deduct student loan interest if:

  • You paid interest on a qualified student loan in the tax year,
  • You are legally obligated to pay interest on a qualified student loan,
  • Your filing status is not married filing separately,
  • You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s tax return, or
  • You are a single filer with income under $65,000, however, your full tax deduction phases out (is gradually reduced) between $65,000 and $80,000 ($135,000 and $165,000 married filing jointly). If your income falls above those limits, student loan interest is not tax-deductible.

The other good news regarding the student loan interest deduction is that you do not need to itemize your tax deductions in order to claim it. This makes sense considering many recent college graduates are not itemizing tax deductions and instead claim the standard deduction.

If you paid more than $600 in interest to a single lender during the year, you should receive a 1098-E form showing how much interest you paid for that time frame. If you made student loan payments but did not receive a 1098-E, you are still entitled to claim the interest deduction, but you may need to call the lender or pull up your records online.

Don’t worry about memorizing these tax benefits. TurboTax has you covered and will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers. If you still have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.

Comments (21) Leave your comment

  1. about the married filing separately requirement…..my daughter is legally separated and the divorce will be final in 4 months. can she qualify?

  2. My loan servicer (Navient) is telling me that I CANNOT deduct the interest paid on my loan last year because I re-financed it with them mid year. Essentially, I was paying really high interest until May 2018 and in June, I had Navient refinance the loan. Is this true that if you re-fi, you cannot claim any of the interest paid in that year to either of the loan services?

  3. I was going to beauty schools of america for barber class and recieve a letter saying i can file for student credits am i going to get any cash back from that

  4. i received a 1098e from AES where i paid $2100 in interest. I also paid $450 in interest to my federal loans through myfedloan.org. i did not receive a 1098e for the federal loan since it does not exceed $500. however, can i had this to the $2100 interest i paid to AES for a total over $2500?

    1. Hello Jen

      Yes your interest paid on a student loan is a potential deduction on your tax return. There are certain income limits that apply but TurboTax can walk you through the steps to see if it is deductible to your situation.

      Tuition and fees is also a potential deduction on your taxes as there are three possible credits/deductions that are available. TurboTax can determine the one that is most beneficial to you.

      Thank you

      TurboTax Derek

  5. I If I am still in school and haven’t paid anything back on my loans yet, do I still qualify? I haven’t paid any money out of pocket yet back to my debtors.

    1. No. You can only deduct interest you actually PAID during the year. If the loans are in your name and someone else (like your parents) paid interest for you then you can deduct that.

  6. if you’re on the IBR plan you did not make a payment so you did not have any interest listed BUT if you consolidate your loans it will qualify as one BIG payment and you WILL get a interest amount

  7. If I have graduated and am currently not enrolled in school will I be able to deduct loan interest? Everything I see says that you have to be at least enrolled part time in school.

    1. I think you’re a little confused. You don’t have to be a student to deduct loan interest.

      You’ve graduated, most likely making your loan payments, you can deduct it. But as this says no more than $2500 a year. You have to be a filing your taxes as single. Can must be making less than $60000 a year.

  8. is it smart to completely pay student loan off or pay off the high interest credit cards an double up on the $35,000.00 loan? Using my defined benefits or just roll it over in 401 k plan?

  9. Who are they kidding $2500..? All student loan interest should be fully deductible regardless. They want Americans to be educated, assist in the process. What makes me laugh is that there was a time, long time ago, pre Ronald Regan, (screw the middle class) when all interest was tax deductible. Why not for student loans? All student loan interest should could come right off the top of your income. There should be no limited as to how much. The only requirement should be that you graduated. No tax deductions for I tried but did not finish.

  10. i owe federal studdent loans and interest but am on the IBR and have qualified the tax year not to make payments. Can i still claim anything on my taxes if i did not make a payment,

    1. @lesa.hudgens. No, you would have to make a payment to be able to deduct the interest paid on that payment. Any interest accrued and not paid is not deductible.

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