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, including:
- 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.
- The individual income limit is $80,000 modified, adjusted gross income ($160,000 for married couples filing jointly).
Please also note:
- 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.
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 $80,000 or less ($160,000 or less 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 less than $68,000 ($136,000 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 of eligible borrowers do not receive a Form 1098-E, but will receive a tax information letter.
- Form 1098-E will include all eligible interest payments received by December 31. Please be aware 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 provides the amount of interest income earned on a Upromise® account during the calendar year. It’s provided to borrowers who 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 earned any Upromise interest income, 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 on Sallie Mae student loans will be notified of the total amount of interest paid on eligible loans, not necessarily the interest they (the cosigner) paid. This notification is solely informative. 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
- Create or log in to your account at SallieMae.com.
- Go to your Profile (select Settings, and then Account Settings).
- Click the Communication preferences button.
- For tax statements, choose Yes under 1098-E Consent.
- Click Update to submit your changes.
How to get your forms
- Online: Forms are available to view/download by January 31. We’ll email you when yours is ready.
- By mail: Forms are mailed by January 31.
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.