If you’re making monthly student loan payments, it can be frustrating to see how much of it is going toward interest. As the interest continues to accrue on your student loans, it can make repayment more difficult and costly.
When tax time comes around, you may find yourself asking: Is student loan interest tax deductible? The good news is that there is a student loan interest deduction. The bad news is not everyone will qualify.
Read on to learn more about deducting student loan interest and the eligibility requirements.
Is student loan interest tax deductible?
Student loan interest is tax deductible if you meet certain conditions.
Qualified student loan borrowers may be able to deduct up to $2,500 of the interest paid on their student loans during the tax year.
If you paid more than $2,500 in interest during the year, your deduction will be capped at $2,500. If you paid less than $2,500, you’ll be able to deduct the amount you paid toward interest.
Deductions help you lower your overall taxable income. Depending on your unique tax situation, this may lower the amount you owe to the IRS.
Keep in mind:
The student loan interest tax deduction differs from a tax credit, as it directly lowers your taxable income, not the tax owed or refund amount. You don’t need to itemize this deduction since it’s considered an adjustment to your income.
Who can deduct student loan interest?
Whether you have federal student loans, private student loans, or a mix of both, you may be eligible to deduct student loan interest if:
- You paid interest on a qualified student loan during the current tax year.
- You’re legally required to pay interest on your loans.
- Your tax filing status isn’t married filing separately.
- You or your spouse (filing jointly) are not considered a dependent on anyone else’s tax return.
- You meet the Modified Adjusted Gross Income (MAGI) requirements.
What is considered a qualified student loan?
To qualify as "eligible student loans" for the student loan interest tax deduction, the IRS states that your loan(s) must meet the following criteria:
- Be for you, your spouse, or a dependent
- Be used for higher education costs for an eligible student during the academic year
- Be used for expenses that were paid or incurred shortly before or after taking on the loans
How to calculate modified adjusted gross income (MAGI)
To qualify for the student loan interest deduction, you’ll also need to meet the modified adjusted gross income (MAGI) limits.
This means your income must be under a certain limit. If it falls into a specific bracket, the deduction amount is reduced. If you earn more than the upper limit, you’re ineligible for this deduction.
Below are the 2023 MAGI requirements to qualify for the student loan interest deduction:
| | |
|---|
| | |
| Between $75,000 and $90,000 | Between $155,000 and $185,000 |
| | |
So if you’re single and your MAGI is less than $75,000, you’re eligible to deduct up to $2,500. The same goes for married joint filers earning less than $155,000.
The phaseout begins for single filers starting at $75,000, and $155,000 for joint filers. In other words, the amount you can deduct will be reduced.
If you’re single and your MAGI is $90,000 or more, or you’re jointly filing with a MAGI of $185,000 or more, you no longer qualify for the student loan interest tax deduction.
Tip:
If you're uncertain about your eligibility for the student loan interest tax deduction, use this IRS tool to determine if your annual interest payments are deductible.
How to claim the student loan interest tax deduction
If you meet the eligibility requirements for the student loan tax deduction, you’ll need to gather some forms and information from your loan servicer.
You’ll receive form 1098-E from your loan servicer at the beginning of the year if your total interest payments were $600 or more. The 1098-E form shows how much you paid in interest, which you can use when doing your taxes. If you have multiple student loans and loan servicers, you may receive more than one 1098-E.
If your total interest payments were less than $600, you may not receive a form. In this case, you should contact your loan servicer to verify how much you paid in interest during the tax year so you can report it on your taxes.
After you’ve confirmed your eligibility and have received the 1098-E form(s), you can use Schedule 1 (Form 1040), line 21 to input your student loan interest deduction.
Other tax benefits for education
Aside from the student loan interest tax deduction, there are some other tax benefits for education you may want to look into:
- The American Opportunity Credit: Through this tax credit, you can claim up to $2,500 per student, if you meet the eligibility requirements. This credit is available while a student is attending school and can be claimed for four years.
- The Lifetime Learning Credit: This tax credit lets you claim up to $2,000 for educational expenses such as tuition, books, and other supplies required for your course of study. There is no cap on the number of years you can claim this credit.
Note:
You’re only eligible to use one of these tax credits for yourself/the same student in a year. Credits can be advantageous as they directly lower your tax liability.
Through the student loan interest deduction and these other education credits, you can help offset some of the costs of going to college.
Advertiser DisclosureOverview
Brazos offers refinancing loans to Texas residents who have a bachelor’s degree or higher from an eligible school. There are no origination or application fees, and interest rates could be lower than what you find with other private lenders.
However, some borrowers may find that Brazos has relatively strict eligibility requirements. Borrowers must have a minimum income of $60,000 and a credit score of 720 or higher. If you can’t meet those minimums alone, you can add a cosigner that can be released after 24 on-time consecutive payments.
pros
- Five loan terms available
- Competitive rates
- Cosigner release
- No origination or application fees
- Autopay discount of 0.25 percentage points
cons
- Only available to Texas residents
- High minimum credit and income requirements
- Bachelor’s degree required
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, up to $150,000 for bachelor’s degrees and $400,000 for graduate, medical, law, or other professional degrees
Cosigner release
Yes, after 24 on-time payments
Eligibility
Borrower must be a Texas resident and a U.S. citizen or permanent resident who has a bachelor’s degree or higher.
$5,000 up to the full balance
Overview
Undergraduate and graduate students can refinance their student loans with SoFi® if they meet eligibility requirements. You can prequalify for a loan in two minutes without affecting your credit score, and the lender offers both fixed and variable rates. Plus, SoFi offers unique benefits to its members, including access to networking events and financial advisers.
SoFi requires a minimum loan balance of $5,000 to refinance. You can add a cosigner to your application, and remove them after 24 consecutive on-time payments. You can find out your potential rate through prequalification, but the lender doesn't disclose its minimum credit score or income requirements.
pros
- Doesn’t charge loan prepayment, origination, application, or late payment fees
- Borrowers can get free financial planning advice, referral bonuses, and discounts
- Offers a wide range of repayment plans
cons
- Must have at least $5,000 in loans to refinance
- No cosigner release available
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$5,000 up to full outstanding balance
Eligibility
Must be a U.S. citizen or permanent resident. Must have made 6 on-time payments in the past 6 months, with no record of default, delinquency, bankruptcy, or foreclosure in the last five years. Employment is required, or you must have a job offer starting within 90 days. Must also have attended a Title IV-eligible school.
$10,000 up to total refinance amount
Overview
ELFI offers student loan refinancing to borrowers who graduated with a bachelor's degree or higher. Borrowers can even refinance their parents' PLUS loans in their own name. Plus, each ELFI borrower gets paired with a student loan adviser to help them through the refinancing process.
While borrowers can add a cosigner to their application, they can't release that cosigner later on. ELFI also doesn't offer rate discounts, but borrowers can apply for a forbearance of up to 12 months if they're experiencing financial hardship.
pros
- Doesn’t charge application or origination fees
- Borrowers are assigned to a student loan adviser
- Student borrowers can refinance parent PLUS loans in their name
- Clear credit and income requirements
- Offers financial hardship forbearance of up to 12 months
cons
- Doesn’t offer any discounts
- Need at least a bachelor’s degree to refinance
- Doesn’t offer cosigner release
- Charges fees for late and returned payments
Loan terms
5, 7, 10, 15, or 20 years for student loan refinancing; 5, 7, or 10 years for parent loan refinancing
Loan amounts
Minimum of $10,000 with no set maximum.
Eligibility
Must be a U.S. citizen or permanent resident with a bachelor’s degree or higher. Must have at least $10,000 in student loans to refinance and a minimum credit history of 36 months.
Overview
LendKey is a marketplace that connects borrowers with more than 300 community banks and credit unions to find the best student loan refinancing options. Unlike most lenders, LendKey allows you to refinance your student loans while you're still in school, as long as you've earned at least an associate degree.
One of LendKey's biggest advantages is that it can help you compare multiple loan offers in one place. However, specific loan terms and eligibility requirements will vary by lender. Basic eligibility criteria include a minimum credit score of 680 and at least $5,000 in outstanding debt to refinance.
pros
- You can refinance with just an associate degree
- Can earn a $200 bonus for referring friends and family
- Lower your rate by a quarter of a percentage point with autopay
- No fees for applications or loan origination
cons
- Some lenders may require membership in a credit union or local bank
- Loan terms and qualifications vary by lender
Loan terms
5, 7, 10, 15, or 20 years
Cosigner release
Varies based on lender's terms
Eligibility
Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from one of LendKey lenders’ eligible institutions.
Overview
INvestEd is a nonprofit based in Indiana that offers student loan refinancing to borrowers nationwide. It offers competitive rates and a discount for setting up autopay. INvestEd also allows cosigners to be released after 12 on-time payments, which is sooner than some other student loan refinancing lenders.
However, the most you can refinance through INvestEd is $250,000, less than what other lenders may allow. It also has strict credit and income requirements to qualify, or you'll need an eligible cosigner. INvestEd clearly defines its credit requirements before you apply, but you can't prequalify with a soft credit check.
pros
- Refinancing available even for non-degree holders
- Offers a one-quarter percentage point rate discount for autopay
- Deferment available while in school, military service or under financial hardship
- Will release cosigners after as few as 12 payments
cons
- Relatively low maximum refinance amount compared with some competitors
- Doesn’t offer prequalification to see rates before you apply
- No refinancing available for international students
- Parent loans cannot be refinanced in student’s name
Eligibility
U.S. citizens or permanent residents are eligible. Borrowers must meet minimum requirements including a FICO score of 670 or higher, annual income of $36,000, a debt-to-income ratio below 40% to 50%, a year of continuous employment, and no defaults or serious collection activities in recent years.
Overview
Citizens student loan refinancing is available to qualified borrowers who want to refinance at least $10,000.
Borrowers who earned undergraduate degrees can refinance as much as $300,000 in student loans. Those who borrowed for graduate or professional degrees can refinance from $500,000 to $750,000. Citizens refinancing loans are available with fixed or variable rates. Repayment terms are flexible, ranging from five to 20 years.
Medical residents can refinance student loans and only pay $100 per month for up to four years while completing residency or fellowship.
pros
- Range of repayment options between 5 and 20 years
- Offers prequalification with no impact on credit score
- Offers rate discounts for existing customers and autopay
cons
- Cosigners not eligible for release until after 36 payments are made
- Refinancing unavailable until you make 12 payments on your loans if you earned an associate degree or no degree at all
- Minimum loan amounts are higher than some other lenders
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, with a maximum of $300,000 for bachelor’s degree or below; $500,000 for graduate degrees; and $750,000 for professional degrees
Eligibility
Must refinance at least $10,000 in student loans and be a U.S. citizen, permanent resident, or resident alien with a valid U.S. Social Security number. Must have earned at least a bachelor's degree to qualify.
Overview
EdvestinU offers student loan refinancing through Granite Edvance Corporation, a New Hampshire-based nonprofit. The lender stands out with competitive interest rates and flexible repayment terms for borrowers with strong credit. To qualify, you'll need a credit score of at least 700 and an annual income of $30,000 for loans less than $100,000 or $50,000 for larger amounts. However, loans aren't available in all U.S. states.
Unlike many lenders, EdvestinU lets you refinance without a degree or while still enrolled in school. New Hampshire residents also receive a 1.5 percentage point interest rate reduction, making it an excellent option for those in the state.
pros
- You can refinance without a degree or while enrolled in school
- Autopay rate discount available
- New Hampshire residents save 1.5 percentage points on their interest rate
cons
- Refinancing is only available in select states
- High minimum credit score requirement
- Requires a higher minimum loan balance than some lenders
- Cosigner release requires 2 years of on-time payments
Eligibility
U.S. citizens or permanent residents who are at least 18 years old and reside in Alaska, Arkansas, Colorado, Connecticut, Florida, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
$10,000 up to the total amount
Overview
Massachusetts Educational Financing Authority (MEFA) is a student refinancing lender offering a wide range of options, including to borrowers who didn't finish school. Though the lender doesn't offer variable-rate options, its fixed-rate loans have competitive rates.
MEFA's mission is to provide affordable student loans, and it doesn't charge any fees. You must have at least $10,000 in student loans to refinance, and you must have made a minimum of six consecutive on-time payments over the last six months. Borrowers who are unable to qualify on their own can add a cosigner to their application.
pros
- You can refinance without having graduated
- Doesn’t charge fee
- Can prequalify to check your rate
cons
- Can’t release a cosigner
- Doesn’t have any discounts
- Can’t refinance parent student loans
- Doesn’t offer variable-rate loans
Loan amounts
$10,000 up to your total debt
Eligibility
Must be a U.S. citizen or permanent resident who is the primary borrower on education debt used to attend an eligible college or university. Must have made six on-time loan payments over the most recent six months. Must have no history of default or delinquency on education debt for the past 12 months and no history of bankruptcy or foreclosure in the past five years.
Overview
The Rhode Island Student Loan Authority (RISLA) is a nonprofit lender offering student loan refinancing to borrowers across the U.S. You can refinance even if you didn't complete your degree, as long as you have at least $7,500 in student loan debt.
What makes RISLA unique is the flexibility it offers borrowers. If you're facing financial difficulties, RISLA provides income-based repayment options to help manage your payments. For added relief, you can access up to 24 months of forbearance, which is more than many lenders offer. If you return to graduate school, you can defer your payments for up to three years, giving you time to focus on your studies without worrying about loan payments.
pros
- Offers income-based repayment
- Generous payment relief options
- You can refinance without a degree
- Get a rate discount when you enroll in autopay
cons
- High minimum income requirement
- No cosigner release option
- Fewer repayment terms to choose from
- Does not offer variable rates
Loan amounts
$7,500 minimum up to of $250,000, depending on degree
Eligibility
Borrower or cosigner must meet credit requirements. Student must be a U.S. citizen or permanent resident and have used original student loans to attend an eligible degree-granting institution.
Overview
Brazos offers refinancing loans to Texas residents who have a bachelor’s degree or higher from an eligible school. There are no origination or application fees, and interest rates could be lower than what you find with other private lenders.
However, some borrowers may find that Brazos has relatively strict eligibility requirements. Borrowers must have a minimum income of $60,000 and a credit score of 720 or higher. If you can’t meet those minimums alone, you can add a cosigner that can be released after 24 on-time consecutive payments.
pros
- Five loan terms available
- Competitive rates
- Cosigner release
- No origination or application fees
- Autopay discount of 0.25 percentage points
cons
- Only available to Texas residents
- High minimum credit and income requirements
- Bachelor’s degree required
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, up to $150,000 for bachelor’s degrees and $400,000 for graduate, medical, law, or other professional degrees
Cosigner release
Yes, after 24 on-time payments
Eligibility
Borrower must be a Texas resident and a U.S. citizen or permanent resident who has a bachelor’s degree or higher.
Loan Amounts
$5,000 up to the full balance
Overview
Undergraduate and graduate students can refinance their student loans with SoFi® if they meet eligibility requirements. You can prequalify for a loan in two minutes without affecting your credit score, and the lender offers both fixed and variable rates. Plus, SoFi offers unique benefits to its members, including access to networking events and financial advisers.
SoFi requires a minimum loan balance of $5,000 to refinance. You can add a cosigner to your application, and remove them after 24 consecutive on-time payments. You can find out your potential rate through prequalification, but the lender doesn't disclose its minimum credit score or income requirements.
pros
- Doesn’t charge loan prepayment, origination, application, or late payment fees
- Borrowers can get free financial planning advice, referral bonuses, and discounts
- Offers a wide range of repayment plans
cons
- Must have at least $5,000 in loans to refinance
- No cosigner release available
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$5,000 up to full outstanding balance
Eligibility
Must be a U.S. citizen or permanent resident. Must have made 6 on-time payments in the past 6 months, with no record of default, delinquency, bankruptcy, or foreclosure in the last five years. Employment is required, or you must have a job offer starting within 90 days. Must also have attended a Title IV-eligible school.
Loan Amounts
$10,000 up to total refinance amount
Overview
ELFI offers student loan refinancing to borrowers who graduated with a bachelor's degree or higher. Borrowers can even refinance their parents' PLUS loans in their own name. Plus, each ELFI borrower gets paired with a student loan adviser to help them through the refinancing process.
While borrowers can add a cosigner to their application, they can't release that cosigner later on. ELFI also doesn't offer rate discounts, but borrowers can apply for a forbearance of up to 12 months if they're experiencing financial hardship.
pros
- Doesn’t charge application or origination fees
- Borrowers are assigned to a student loan adviser
- Student borrowers can refinance parent PLUS loans in their name
- Clear credit and income requirements
- Offers financial hardship forbearance of up to 12 months
cons
- Doesn’t offer any discounts
- Need at least a bachelor’s degree to refinance
- Doesn’t offer cosigner release
- Charges fees for late and returned payments
Loan terms
5, 7, 10, 15, or 20 years for student loan refinancing; 5, 7, or 10 years for parent loan refinancing
Loan amounts
Minimum of $10,000 with no set maximum.
Eligibility
Must be a U.S. citizen or permanent resident with a bachelor’s degree or higher. Must have at least $10,000 in student loans to refinance and a minimum credit history of 36 months.
Overview
LendKey is a marketplace that connects borrowers with more than 300 community banks and credit unions to find the best student loan refinancing options. Unlike most lenders, LendKey allows you to refinance your student loans while you're still in school, as long as you've earned at least an associate degree.
One of LendKey's biggest advantages is that it can help you compare multiple loan offers in one place. However, specific loan terms and eligibility requirements will vary by lender. Basic eligibility criteria include a minimum credit score of 680 and at least $5,000 in outstanding debt to refinance.
pros
- You can refinance with just an associate degree
- Can earn a $200 bonus for referring friends and family
- Lower your rate by a quarter of a percentage point with autopay
- No fees for applications or loan origination
cons
- Some lenders may require membership in a credit union or local bank
- Loan terms and qualifications vary by lender
Loan terms
5, 7, 10, 15, or 20 years
Cosigner release
Varies based on lender's terms
Eligibility
Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from one of LendKey lenders’ eligible institutions.
Overview
INvestEd is a nonprofit based in Indiana that offers student loan refinancing to borrowers nationwide. It offers competitive rates and a discount for setting up autopay. INvestEd also allows cosigners to be released after 12 on-time payments, which is sooner than some other student loan refinancing lenders.
However, the most you can refinance through INvestEd is $250,000, less than what other lenders may allow. It also has strict credit and income requirements to qualify, or you'll need an eligible cosigner. INvestEd clearly defines its credit requirements before you apply, but you can't prequalify with a soft credit check.
pros
- Refinancing available even for non-degree holders
- Offers a one-quarter percentage point rate discount for autopay
- Deferment available while in school, military service or under financial hardship
- Will release cosigners after as few as 12 payments
cons
- Relatively low maximum refinance amount compared with some competitors
- Doesn’t offer prequalification to see rates before you apply
- No refinancing available for international students
- Parent loans cannot be refinanced in student’s name
Eligibility
U.S. citizens or permanent residents are eligible. Borrowers must meet minimum requirements including a FICO score of 670 or higher, annual income of $36,000, a debt-to-income ratio below 40% to 50%, a year of continuous employment, and no defaults or serious collection activities in recent years.
Overview
Citizens student loan refinancing is available to qualified borrowers who want to refinance at least $10,000.
Borrowers who earned undergraduate degrees can refinance as much as $300,000 in student loans. Those who borrowed for graduate or professional degrees can refinance from $500,000 to $750,000. Citizens refinancing loans are available with fixed or variable rates. Repayment terms are flexible, ranging from five to 20 years.
Medical residents can refinance student loans and only pay $100 per month for up to four years while completing residency or fellowship.
pros
- Range of repayment options between 5 and 20 years
- Offers prequalification with no impact on credit score
- Offers rate discounts for existing customers and autopay
cons
- Cosigners not eligible for release until after 36 payments are made
- Refinancing unavailable until you make 12 payments on your loans if you earned an associate degree or no degree at all
- Minimum loan amounts are higher than some other lenders
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, with a maximum of $300,000 for bachelor’s degree or below; $500,000 for graduate degrees; and $750,000 for professional degrees
Eligibility
Must refinance at least $10,000 in student loans and be a U.S. citizen, permanent resident, or resident alien with a valid U.S. Social Security number. Must have earned at least a bachelor's degree to qualify.
Overview
EdvestinU offers student loan refinancing through Granite Edvance Corporation, a New Hampshire-based nonprofit. The lender stands out with competitive interest rates and flexible repayment terms for borrowers with strong credit. To qualify, you'll need a credit score of at least 700 and an annual income of $30,000 for loans less than $100,000 or $50,000 for larger amounts. However, loans aren't available in all U.S. states.
Unlike many lenders, EdvestinU lets you refinance without a degree or while still enrolled in school. New Hampshire residents also receive a 1.5 percentage point interest rate reduction, making it an excellent option for those in the state.
pros
- You can refinance without a degree or while enrolled in school
- Autopay rate discount available
- New Hampshire residents save 1.5 percentage points on their interest rate
cons
- Refinancing is only available in select states
- High minimum credit score requirement
- Requires a higher minimum loan balance than some lenders
- Cosigner release requires 2 years of on-time payments
Eligibility
U.S. citizens or permanent residents who are at least 18 years old and reside in Alaska, Arkansas, Colorado, Connecticut, Florida, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
Loan Amounts
$10,000 up to the total amount
Overview
Massachusetts Educational Financing Authority (MEFA) is a student refinancing lender offering a wide range of options, including to borrowers who didn't finish school. Though the lender doesn't offer variable-rate options, its fixed-rate loans have competitive rates.
MEFA's mission is to provide affordable student loans, and it doesn't charge any fees. You must have at least $10,000 in student loans to refinance, and you must have made a minimum of six consecutive on-time payments over the last six months. Borrowers who are unable to qualify on their own can add a cosigner to their application.
pros
- You can refinance without having graduated
- Doesn’t charge fee
- Can prequalify to check your rate
cons
- Can’t release a cosigner
- Doesn’t have any discounts
- Can’t refinance parent student loans
- Doesn’t offer variable-rate loans
Loan amounts
$10,000 up to your total debt
Eligibility
Must be a U.S. citizen or permanent resident who is the primary borrower on education debt used to attend an eligible college or university. Must have made six on-time loan payments over the most recent six months. Must have no history of default or delinquency on education debt for the past 12 months and no history of bankruptcy or foreclosure in the past five years.
Overview
The Rhode Island Student Loan Authority (RISLA) is a nonprofit lender offering student loan refinancing to borrowers across the U.S. You can refinance even if you didn't complete your degree, as long as you have at least $7,500 in student loan debt.
What makes RISLA unique is the flexibility it offers borrowers. If you're facing financial difficulties, RISLA provides income-based repayment options to help manage your payments. For added relief, you can access up to 24 months of forbearance, which is more than many lenders offer. If you return to graduate school, you can defer your payments for up to three years, giving you time to focus on your studies without worrying about loan payments.
pros
- Offers income-based repayment
- Generous payment relief options
- You can refinance without a degree
- Get a rate discount when you enroll in autopay
cons
- High minimum income requirement
- No cosigner release option
- Fewer repayment terms to choose from
- Does not offer variable rates
Loan amounts
$7,500 minimum up to of $250,000, depending on degree
Eligibility
Borrower or cosigner must meet credit requirements. Student must be a U.S. citizen or permanent resident and have used original student loans to attend an eligible degree-granting institution.
Meet the expert:
Melanie Lockert
Melanie Lockert is a writer and author of “Dear Debt” with over 10 years of experience. Her work has been featured by CNN, Business Insider, U.S. News & World Report, and Yahoo Finance.
