6.4 Student Loan Interest Deduction
Key Takeaways
- The maximum student loan interest deduction is $2,500 per year, claimed as an above-the-line adjustment on Schedule 1
- For 2024, MAGI phase-out ranges are $80,000-$95,000 (Single/HOH) and $165,000-$195,000 (MFJ); MFS cannot claim this deduction
- The loan must be for qualified higher education expenses for the taxpayer, spouse, or dependent
- Qualified expenses include tuition, fees, room and board, books, supplies, and transportation
- The taxpayer must be legally obligated to pay, cannot be claimed as a dependent, and Form 1098-E reports interest of $600+
Maximum Deduction
$2,500 per year (above-the-line, no itemizing required)
2024 MAGI Phase-Out Ranges
| Filing Status | Full Deduction | Phase-Out | No Deduction |
|---|---|---|---|
| Single/HOH | < $80,000 | $80,000-$95,000 | > $95,000 |
| MFJ | < $165,000 | $165,000-$195,000 | > $195,000 |
| MFS | Cannot claim | N/A | N/A |
Who Can Claim?
- Legally obligated to pay the interest
- Not claimed as a dependent
- Not filing MFS
Qualified Expenses
| Category | Examples |
|---|---|
| Tuition & Fees | Course tuition, lab fees |
| Room & Board | Dormitory, meal plans |
| Books & Supplies | Textbooks, equipment |
| Transportation | Travel to/from school |
Loans That Do NOT Qualify
- Loans from family members
- Loans from employer plans
Form 1098-E
Lenders report interest of $600 or more on Form 1098-E.
EA Exam Tips
- MFS cannot claim this deduction
- Maximum is $2,500
- Cannot be a dependent
- Know the phase-out ranges
Exam Focus
For Student Loan Interest Deduction, place the deduction in the return workflow. Student loan interest is an adjustment to income, so candidates should know who paid the interest, who was legally obligated on the loan, whether the loan funded qualified education expenses, and whether filing status or dependency rules block the deduction. Exam questions often test the difference between paying someone else's debt voluntarily and deducting interest on a qualified loan for yourself, a spouse, or a dependent at the time the debt was incurred.
For 2024, what is the MFJ MAGI phase-out range for the student loan interest deduction?
Tom files MFS and paid $2,800 in student loan interest. His MAGI is $60,000. What can he deduct?
Which loan would NOT qualify for the student loan interest deduction?