Student Tax Deductions for College Education - Student Loan Interest, Tuition and Fees

There are two special tax deductions available to help you pay your education expenses: the Student Loan Interest Deduction and the Tuition and Fees Deduction

If you claim an education tax credit, you may still claim the Student Loan Interest Deduction, but you cannot claim the Tuition and Fees Deduction. 

Student Loan Interest Deduction

If you have started to pay back your student loans, you may be able to reduce your taxable income by up to $2,500 of the student loan interest you have paid for you, your spouse, or your dependent. This also includes the one-time "loan origination fee" charged by your lender.

The Student Loan Interest Deduction is an "above-the-line" deduction, which means that you do not need to itemize deductions in order to claim it.

Do I Qualify for the Student Loan Interest Deduction?

To qualify for the deduction, the student loan on which you paid interest must be a commercial loan taken out exclusively for the purposes of paying for education. The loan may only apply to a student who is enrolled at least half-time in a degree program. The student must be you, your spouse, or your dependent.

In 2014, the amount of your deduction will begin to decrease, or phaseout, at an adjusted gross income of $60,000 ($120,000 if married filing jointly) and the deduction will be unavailable to you if your AGI is $75,000 ($150,000 if married filing jointly) or higher.

Qualified Education Expenses for the Student Loan Interest Deduction

Qualified expenses for the Student Loan Interest Deduction are the total costs of attending an eligible educational institution (including graduate school). These costs include: 

  • Tuition and fees
  • Books, equipment, and supplies
  • Room and board
  • Other necessary expenses, such as transportation

Room and board costs only qualify for the deduction if they are not more than the greater of:

  • The allowance for room and board (as determined by the eligible educational institution) that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, OR
  • The actual amount charged if the student is residing in housing owned or operated by the educational institution

Tuition and Fees Deduction

Important: This tax deduction expired on December 31, 2013. However, Congress extended this deduction until December 31, 2014. Therefore, you can claim it on your 2014 Tax Return.

You may be able to claim a tax deduction of up to $4,000 for qualifying tuition and fees you paid for you, your spouse, or a dependent. You may deduct any qualified expenses up to $4,000, even if you paid the tuition and fees with a loan. If you take the Tuition and Fees Deduction and you have also paid interest on student loans, you may be able to take the Student Loan Interest Deduction as well.

The Tuition and Fees Deduction is an above-the-line deduction, so you do not need to itemize to claim it on your tax return.

Do I Qualify for the Tuition and Fees Deduction?

To qualify, the student for whom you paid tuition and fees must be you, your spouse, or your dependent. The student need only be enrolled part-time. 

You will NOT qualify for the Tuition and Fees Deduction if any of the following are true:

  • Your filing status is married filing separately
  • You may be claimed as a dependent on another tax return (whether or not you are actually claimed)
  • You are claiming either the Lifetime Learning Credit or The American Opportunity Credit
  • The tuition was paid in pursuit of a doctoral degree (a PHD)
  • Your adjusted gross income is higher than $80,000 ($160,000 if married filing jointly)
  • You were a nonresident alien for any part of the Tax Year and did not elect to be treated as a resident alien for tax purposes. 

For 2014, the value of the Tuition and Fees Deduction begins phasing out at AGIs of $65,000 ($130,000 if married filing jointly). If your adjusted gross income is $65,000 or less ($130,000 or less if married filing jointly), then you will qualify for the full $4,000 deduction. If your AGI is from $65,001 to $80,000 ($130,001 to $160,000 if married filing jointly), the maximum amount of your Tuition and Fees Deduction will be reduced. If your AGI is above $80,000/$160,000, the deduction will not be available to you.

 

Related Student Tax Topics:

Review our student tax guide.

See an overview of student tax breaks.

Learn about valuable student tax credits

Find out how to save money with tax-free student savings accounts.

Read about common student tax myths as well as helpful beginner tax tips.

Learn about other tax deductions and tax credits for which you may qualify.

Use our Free Tax Tools to help calculate taxes or determine eligibility for certain credits.

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