Student loan tax deductions and credits

The government offers some tax benefits for the student loan interest you’ve paid during the calendar year—for both federal and private student loans. There are deductions and credits.

Student loan interest tax deductions

According to IRS.gov, you can reduce your income that’s subject to taxes if you’ve paid interest on a qualified student loan and meet several other eligibility requirements:

  • The student must be you, your spouse, or your dependent.
  • The student must be enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible education institution.
  • Your deduction cannot exceed $2,500 per year.
  • Voluntary interest payments during school, deferment, or forbearance may be eligible for deduction.
  • Interest paid on consolidation loans may be deducted.
  • There are eligibility rules, including income limits—$80,000 modified adjusted gross income ($160,00 for married couples filing jointly).

For full details on eligibility requirements for a student loan deduction and how to claim it, see IRS Publication 970, Tax Benefits for Education, or speak with a tax professional.

Student loan tax credits

  • American Opportunity Tax Credit: Undergraduates can take a credit for books, supplies, and tuition and fees. This credit may be available if your modified, adjusted gross income is $90,000 or less (over $160,000 but less than $180,000 if filing jointly).
  • Lifetime Learning Tax Credit: Undergraduates, graduates, and those taking professional degree courses may qualify for a tax credit. This credit may be available if your modified, adjusted gross income is $65,000 or less ($130,000 if filing jointly).

For eligibility and details on these programs, see IRS Publication 970, Tax Benefits for Education, or speak with a tax professional.


Forms for student loan tax deductions

You may need one of these documents to deduct eligible interest on your federal income tax.

Form 1098-E: Student Loan Interest Statement

This form provides the amount of interest paid on eligible student loan(s) during the calendar year. This statement is only available for the borrower. Cosigners do not receive a Form 1098-E.

  • Borrowers may be able to deduct eligible interest on their income tax return, which can reduce their taxable income.
  • Form 1098-E will include all eligible interest payments received by December 31. Please note that the amount of student loan interest paid may be different from the amount of accrued interest that appears on monthly billing statements.

Form 1099-INT: Annual Income Interest Tax Statement

This form shows the amount of interest income earned on a Upromise® account during the calendar year. It’s provided to borrowers who have met the requirements for borrower benefit programs, and have earned more benefit dollars than they paid in eligible student loan interest during the calendar year.

This statement is only available for the borrower. Cosigners do not receive a Form 1099-INT.

Borrowers will never receive both a Form 1098-E and a Form 1099-INT. If you have any Upromise earned benefit, it will be deducted from your Form 1098-E if you're eligible for one. If you’re not eligible for a Form 1098-E, you’ll receive a Form 1099-INT.


Tax Information for Cosigners

Cosigners of a Sallie Mae student loan will be notified of the total amount of interest paid on eligible loans for which they’ve cosigned, not necessarily the interest they (the cosigner) paid. This notification is for informational purposes only. The borrower on the loan(s) will receive the applicable tax form. We encourage you to contact your borrower to obtain tax forms, if needed.


Update your email permissions

To receive an email when your tax form is available, make sure your Tax Statements permission is set to electronic delivery by December 31.

How to update your email permissions

  1. Create or log in to your account.
  2. Go to My Profile (by clicking your name in the upper right-hand corner).
  3. Select the "Edit Contact Info" button.
  4. Place your cursor over the "Email Address" field and click on your email address.
  5. Under the second question regarding Tax Statements, choose "Yes."
  6. Hit "Save" to submit your changes.

How to get your forms

  • Online: We’ll email you in late January when your form is available.
  • By mail: Forms are mailed by January 31.

Download your forms

Get your forms when you receive an email that they are available.

  1. Log in to your account.
  2. Select the Documents and Tax Forms link from the Loans tab.
  3. Go to the Outbound Correspondence tab.
  4. Select the correspondence labeled Important Tax Document and download/print the form for your records.

Questions?

Call us at 855-429-9755. We can’t give tax advice, but here are some sources for more information on taxes.

  • Visit IRS.gov or call 800-829-1040.
  • Refer to IRS Pub 970, “Tax Benefits for Education,” or review the Student Loan Interest Deduction Worksheet in your 1040 or 1040A instructions.
  • Contact your tax advisor.

This information is not meant to provide tax advice. Consult with a tax advisor for education tax credit and deduction eligibility. For more information, see IRS Publication 970.

The American Opportunity Credit, Lifetime Learning Credit, and tuition and fees deduction may not be allowed unless the student receives a Form 1098-T from an eligible education institution. However, there are exceptions to this requirement.

 This information was gathered on June 21, 2017, from https://www.irs.gov/pub/irs-pdf/p970.pdf.

 This information was gathered on June 22, 2017, from https://www.irs.gov/individuals/aotc.