Student Loan Interest Deduction is needed to reduce the cost of borrowing for higher education. What do I mean? Taxpayers will deduct the interest of $2,500 which is paid on a student loan from your taxable income. In fact, it is a strategy that parents can use to pay for higher education.
Likewise, now that interest on student loans from federal agencies has been suspended during the Coronavirus crisis by President Trump on March 13, 2020, but this does not affect private student loans. In this case, thus, a private loan may not have interest payment to deduct since there is suspension still holds.
Things you can enjoy with student loan interest deduction
- You can deduct up to $2,500 of interest you paid on a loan for higher education.
- Thus, if you must be eligible, your income should be within certain limits.
- Do you know that interest on student loans from federal agencies has been suspended? Therefore, federal loans may not have the interest to deduct.
How a student loan interest Deduction Works
To qualify, the student loan should at least have been taken out from the taxpayer, or from their dependents. In other words, if the student is not the base person, then a parent cannot claim the deduction even if they help in repaying the loan.
In addition, loans should as well be taken out for at least an academic period in which the student is enrolled at least half-time in a program. Rather, a one that can grant you a degree, certificate, or valuable credential. In summary, this qualified higher education expenses like tuition, room, and board, insurance and health fee, textbooks, etc.
Again, The student’s school must be among the eligible institution.