Student Loan Tax Information

When it’s time to file your annual income tax, remember to review the amount of student loan interest you paid on your federal loans during the year. If you paid $600 or more in loan interest, your loan servicer will send a statement on a 1098-E tax form.

Federal Student Loan Tax Benefit

You may be eligible for certain federal tax credits and deductions based on your federal loan repayment.

The Education Loan Interest Deduction provides up to a $2,500 tax deduction for the interest paid during repayment on a qualified student education loan.

If you are still a full-time student, you may be eligible for other higher education tax benefits.

Tax Liability on Cancelled Student Loans

In certain circumstances, federal loans cancelled under specific programs may be subject to federal and/or state income tax. Your loan servicer will send a 1099-C Cancellation of Debt notice if $600 or more of your loan debt was cancelled; in some cases, this cancellation may be considered “income.”

In general, loan balances that are forgiven under the Public Service Loan Forgiveness program are exempt from federal income taxes. Loan balances forgiven under Income Based Repayment (IBR), Income Contingent Repayment and Pay As You Earn Repayment may be considered income and may be subject to federal and/or state income taxes.

Consult your student loan servicer or a tax professional for details.