Student Loan Interest Tax Deduction

The Student Loan Interest Deduction is a federal tax deduction for higher education expenses. If you took out a student loan to pay for your postsecondary education, you may be able to deduct up to $2,500 per year in the loan interest you paid. To qualify for using this deduction, you had to have paid interest on a qualified student loan and you have to have used the loan money for qualified higher education expenses, including tuition, fees, room, board, supplies, and other related expenses. The student can be you, your spouse, or your dependent.

Student Loan Interest Deduction Amount
The maximum amount of the Student Loan Interest Deduction for 2008 is $2,500 per eligible student per year.

Student Loan Interest Deduction Restrictions
The Student Loan Interest Deduction is available to taxpayers whose Modified Adjusted Gross Income (MAGI) is less than $70,000 ($145,000 if filing jointly). For a MAGI between $55,000 ($115,000 for a jointly-filed return) and $70,000 ($145,000 for married, filing jointly), the maximum allowable deduction is reduced on a sliding scale.

How to claim the Student Loan Interest Deduction
The student loan interest deduction is an adjustment to income before calculating your income tax. You don’t need to itemize your deductions to claim the student loan interest deduction. There are instructions on the 1040 forms for figuring out the correct sliding-scale deduction. The filer can be you, your spouse if you file jointly, or your parent if you’re being claimed as a dependent.

Relevant IRS Form

  • 1098-E: Student Loan Interest Statement, which you’ll receive if you paid interest on a qualified student loan during the year.

Read all the terms and conditions related to IRS education tax breaks
For complete, detailed explanations of “qualified expenses,” “eligible school,” “academic period,” and allowable “funding sources,” “Midwestern disaster areas,” carefully read all the information on the IRS 2008 Tax Benefits for Education web site.

Source: U.S. Internal Revenue Service

Please note: This article is intended to be a general overview of an education tax benefit for the tax year 2008. does not advise on any personal income tax requirements or issues. Use of any information from this web site is for general information only and does not represent personal tax advice either express or implied. You are encouraged to visit the IRS website for more information and to seek professional tax advice for personal income tax questions and assistance.