What this line means
Up to $2,500 of interest you paid on qualified student loans during the year. This is an above-the-line deduction — you do not need to itemize to claim it. The deduction phases out at higher income levels: for 2025, the phaseout begins at $80,000 for single filers and $165,000 for married filing jointly, and the deduction is fully eliminated at $95,000 and $195,000 respectively. You cannot claim this deduction if you file married filing separately.
Does this apply to you?
- You paid interest on a qualified student loan for yourself, your spouse, or a dependent
- You received Form 1098-E showing student loan interest paid during the year
- Your modified AGI is below the phaseout upper limit ($95,000 single, $195,000 MFJ for 2025)
- You are not claimed as a dependent on someone else’s return
Easy to overlook
You can deduct interest on loans for a dependent’s education The deduction is not limited to loans for your own education. If you took out a loan to pay for your dependent’s college and you are legally obligated to repay it, the interest is deductible on your return. 1 However, if the loan is in your child’s name and your child makes the payments, you cannot deduct the interest — only the person legally obligated on the loan and who actually made the payments qualifies. General filing pattern — parents claiming interest on loans in student’s name
Voluntary payments on subsidized loans generate deductible interest If you make payments on a subsidized student loan during a period when interest is not required (such as a grace period or deferment), those payments are applied to interest that accrued. 2 That interest is deductible in the year you pay it, even though you were not required to make payments. Borrowers who make voluntary payments during school or grace periods often miss this deduction. IRS Publication 970 — Tax Benefits for Education
Watch out for this
Claiming the deduction if you file married filing separately. The student loan interest deduction is completely unavailable to MFS filers regardless of income. If you and your spouse file separate returns, neither of you can deduct student loan interest. This rule catches couples who file separately for other reasons (like income-driven repayment plans) without realizing they lose this deduction.
Footnotes
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IRS Publication 970, Tax Benefits for Education, Student Loan Interest Deduction. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩
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IRS Publication 970, Tax Benefits for Education, When Can You Deduct Interest. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩