Is Student Loan Interest Tax Deductible?

If you’re making monthly student loan payments, it can be frustrating to see how much of it is going toward interest. As the interest continues to accrue on your student loans, it can make repayment more difficult and costly. 

When tax time comes around, you may find yourself asking: Is student loan interest tax deductible? The good news is that there is a student loan interest deduction. The bad news is not everyone will qualify. 

Read on to learn more about deducting student loan interest and the eligibility requirements. 

Is student loan interest tax deductible?

Student loan interest is tax deductible if you meet certain conditions. 

Qualified student loan borrowers may be able to deduct up to $2,500 of the interest paid on their student loans during the tax year. 

If you paid more than $2,500 in interest during the year, your deduction will be capped at $2,500. If you paid less than $2,500, you’ll be able to deduct the amount you paid toward interest. 

Deductions help you lower your overall taxable income. Depending on your unique tax situation, this may lower the amount you owe to the IRS. 

Who can deduct student loan interest?

Whether you have federal student loans, private student loans, or a mix of both, you may be eligible to deduct student loan interest if:

• You paid interest on a qualified student loan during the current tax year.
• You’re legally required to pay interest on your loans.
• Your tax filing status isn’t married filing separately.
• You or your spouse (filing jointly) are not considered a dependent on anyone else’s tax return.
• You meet the Modified Adjusted Gross Income (MAGI) requirements.

What is considered a qualified student loan?

To qualify as "eligible student loans" for the student loan interest tax deduction, the IRS states that your loan(s) must meet the following criteria:

• Be for you, your spouse, or a dependent
• Be used for higher education costs for an eligible student during the academic year
• Be used for expenses that were paid or incurred shortly before or after taking on the loans 

How to calculate modified adjusted gross income (MAGI)

To qualify for the student loan interest deduction, you’ll also need to meet the modified adjusted gross income (MAGI) limits. 

This means your income must be under a certain limit. If it falls into a specific bracket, the deduction amount is reduced. If you earn more than the upper limit, you’re ineligible for this deduction. 

Below are the 2023 MAGI requirements to qualify for the student loan interest deduction:

So if you’re single and your MAGI is less than $75,000, you’re eligible to deduct up to $2,500. The same goes for married joint filers earning less than $155,000.

The phaseout begins for single filers starting at $75,000, and $155,000 for joint filers. In other words, the amount you can deduct will be reduced.

If you’re single and your MAGI is $90,000 or more, or you’re jointly filing with a MAGI of $185,000 or more, you no longer qualify for the student loan interest tax deduction. 

How to claim the student loan interest tax deduction

If you meet the eligibility requirements for the student loan tax deduction, you’ll need to gather some forms and information from your loan servicer. 

You’ll receive form 1098-E from your loan servicer at the beginning of the year if your total interest payments were $600 or more. The 1098-E form shows how much you paid in interest, which you can use when doing your taxes. If you have multiple student loans and loan servicers, you may receive more than one 1098-E.

If your total interest payments were less than $600, you may not receive a form. In this case, you should contact your loan servicer to verify how much you paid in interest during the tax year so you can report it on your taxes. 

After you’ve confirmed your eligibility and have received the 1098-E form(s), you can use Schedule 1 (Form 1040), line 21 to input your student loan interest deduction. 

Other tax benefits for education

Aside from the student loan interest tax deduction, there are some other tax benefits for education you may want to look into: 

• The American Opportunity Credit: Through this tax credit, you can claim up to $2,500 per student, if you meet the eligibility requirements. This credit is available while a student is attending school and can be claimed for four years. 
• The Lifetime Learning Credit: This tax credit lets you claim up to $2,000 for educational expenses such as tuition, books, and other supplies required for your course of study. There is no cap on the number of years you can claim this credit. 

Through the student loan interest deduction and these other education credits, you can help offset some of the costs of going to college.