Student Loan Interest Deduction: Who Qualifies and How To Claim It

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Did you pay interest on your student loans last year? If so, you might qualify for the student loan interest deduction — a simple way to reduce your tax bill by up to $2,500, even if you don’t itemize.

So, are student loans tax-deductible? Yes — but only if your income, filing status and loan type meet the IRS requirements.

In this guide, we’ll walk you through:

• Who qualifies for the deduction
• How much you can deduct
• What kinds of loans are eligible
• And how to claim it correctly on your 2025 taxes

Let’s dive in.

What Is the Student Loan Interest Deduction?

The student loan interest deduction is a federal tax break that allows eligible borrowers to deduct up to $2,500 in interest paid on qualified student loans from their adjusted gross income (AGI). This deduction is considered above-the-line, meaning you can claim it even if you take the standard deduction.

According to the IRS, more than 10.9 million taxpayers claimed this deduction in 2022. Depending on your income and tax bracket, this could save you between $200 and $550 on your taxes.

Are Student Loans Tax-Deductible in 2025?

Yes — if you meet the IRS eligibility criteria.

Here’s what you need to qualify:

You must:

• Have paid interest on a qualified student loan in 2024
• Be legally obligated to repay the loan
• Not be claimed as a dependent on someone else’s tax return
• File as single, head of household or married filing jointly
• Have a modified adjusted gross income (MAGI) within the IRS limits

You won’t qualify if:

• You file as married filing separately
• Your income is above the phaseout limits (see next section)
• You’re repaying someone else’s loan that’s not in your name

What Are the Income Limits for 2025?

Your MAGI and filing status determine how much — if any — of the deduction you can claim.

According to the Tax Foundation, nearly 20% of borrowers are phased out of the deduction due to high income levels.

What Types of Student Loans Are Eligible?

Not every loan qualifies for the deduction. The IRS has strict rules about the source of the loan and how the funds were used.

Loans that qualify:

• Federal Direct Loans (subsidized and unsubsidized)
• Federal PLUS Loans (including Parent PLUS)
• Federal Perkins Loans
• Private student loans from banks, credit unions or other qualified lenders
• Consolidated or refinanced loans (as long as the original loan was qualified)

Loans that don’t qualify:

• Loans from family or friends
• Employer-based repayment assistance (if not reported as income)
• Loans used for non-degree programs or unqualified education expenses

Qualified education expenses include:

• Tuition and fees
• Room and board
• Books and supplies
• Transportation and equipment required for coursework

Over 43.2 million Americans hold federal student loan debt, according to the U.S. Department of Education.

How Much Student Loan Interest Can You Deduct?

You can deduct up to $2,500, but only the interest portion of your loan payments — not any principal or late fees.

Example:If you paid $3,000 total toward your student loans in 2024 but only $1,800 was interest, your deduction is limited to $1,800.

According to the Education Data Initiative, the average student loan borrower pays between $1,200 and $2,000 in interest per year.

How To Claim the Student Loan Interest Deduction in 2025

Claiming this deduction is straightforward — but missing a step could cost you.

Step-by-Step Filing Checklist:

1. Make at least $600 in interest payments in 2024 (loan servicers send tax forms if you meet this threshold).
2. Get Form 1098-E from your loan servicer — this shows how much interest you paid.
3. Enter the interest amount on Schedule 1, Line 21 of IRS Form 1040.
4. Double-check that your MAGI is within the allowed range.
5. File your taxes — no need to itemize to claim this deduction.

Tip: If you had multiple loans with different servicers, combine the interest reported on all 1098-E forms to calculate your total.

Exceptions and Common Disqualifiers

Even if you paid interest, you could still be disqualified if:

• You’re still in school and not required to make payments (unpaid interest doesn’t count)
• You paid less than $600 and didn’t receive Form 1098-E — though you can still deduct if you have documentation
• You’re a dependent on someone else’s tax return
• The loan wasn’t in your name, or you’re not legally obligated to repay it
• The loan came from an unqualified source, like a relative

Final Take to GO: Maximize This Easy Tax Break Before Filing

The student loan interest deduction is one of the few tax breaks available without itemizing — and it’s a smart way to save, especially if you’re still paying off student debt in 2025.

To Recap:

• You can deduct up to $2,500 in interest — even if you use the standard deduction
• It covers both federal and private loans (if qualified)
• You’ll need Form 1098-E and a MAGI under the IRS limits to claim it
• This deduction can reduce your taxable income — and increase your refund

Bottom line: Don’t leave this money on the table. If you made student loan payments last year, double-check your eligibility before filing your taxes.

Data is accurate as of August 6, 2025, and is subject to change.

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