1098-E Filing
E-file 1098-E Reporting
Understanding IRS Form 1098-E: Your Guide to Student Loan Interest Deductions
If you're among the millions of Americans paying back student loans, you've probably received a form in the mail each January that looks like alphabet soup: the 1098-E. While tax forms aren't exactly riveting reading material, this particular piece of paper could help you save money when tax season rolls around. Let's break down what this form is, why it matters, and how it might benefit you.
What Exactly Is Form 1098-E?
Form 1098-E is officially called the "Student Loan Interest Statement." Think of it as a receipt from your loan servicer showing exactly how much interest you paid on your student loans during the previous year. Your lender is required to send you this form if you paid $600 or more in student loan interest over the course of the year.
The form itself is pretty straightforward. It contains basic information like your name, address, and Social Security number, along with your lender's information. But the most important piece of information is in Box 1: the total amount of student loan interest you paid during the tax year.
Why Does This Form Exist?
Here's where things get interesting. The federal government offers a tax deduction for student loan interest, which means you can reduce your taxable income by the amount of interest you paid on qualified student loans. Form 1098-E exists to document that interest payment and make it easier for you to claim this deduction when you file your taxes.
This deduction can be particularly valuable because it's an "above-the-line" deduction, which is tax-speak for a deduction you can claim even if you don't itemize your deductions. In other words, you can take the standard deduction AND claim your student loan interest deduction on top of it. That's a win-win situation for many taxpayers.
Who Gets a Form 1098-E?
Your student loan servicer will automatically send you a Form 1098-E if you meet certain criteria. The main requirement is that you paid at least $600 in interest during the tax year. If you paid less than that, your servicer isn't required to send you the form, though some still might as a courtesy.
It's worth noting that you'll receive a separate Form 1098-E from each loan servicer you paid interest to during the year. So if you have federal loans with one servicer and private loans with another, you'll get two forms. If you refinanced or your loans were transferred to a new servicer mid-year, you might receive forms from multiple servicers covering different portions of the year.
Import
E-file
Done
What Loans Qualify?
Not all loans are created equal in the eyes of the IRS. To generate a Form 1098-E, the loan must be a "qualified education loan," which the IRS defines pretty specifically. The loan must have been taken out solely to pay for qualified higher education expenses for you, your spouse, or someone who was your dependent when you took out the loan.
This includes most federal student loans, like Direct Loans, Stafford Loans, PLUS Loans, and Perkins Loans. Private student loans from banks and credit unions typically qualify too, as long as they were used for education expenses. What doesn't qualify? Loans from related parties (like borrowing from your parents), loans from employer-sponsored plans, or personal loans that weren't specifically designated for education.
The education expenses themselves also need to meet IRS standards. Tuition, fees, room and board, books, supplies, equipment, and other necessary expenses all count, as long as they were for enrollment at an eligible educational institution. That institution needs to be eligible to participate in federal student aid programs, which covers most colleges, universities, and vocational schools.
The Student Loan Interest Deduction Explained
Now let's talk about what you can actually do with the information on Form 1098-E. The student loan interest deduction allows you to deduct up to $2,500 of the interest you paid on qualified student loans during the tax year. Notice that's a "up to" situation if you paid $1,200 in interest, you can deduct $1,200. If you paid $3,000, you can only deduct the maximum of $2,500.
This deduction directly reduces your taxable income. So if you're in the 22% tax bracket and you deduct the full $2,500, you'd save about $550 on your taxes. Not bad for simply reporting what you already paid.
However, there are income limits to be aware of. The deduction begins to phase out once your modified adjusted gross income (MAGI) reaches certain thresholds, which are adjusted periodically for inflation. For 2025, the phase-out begins at $85,000 for single filers and $170,000 for married couples filing jointly. The deduction completely phases out at $100,000 and $200,000, respectively. If your income is above these upper limits, you won't be able to claim the deduction at all, regardless of how much interest you paid.
How to Use Form 1098-E When Filing Your Taxes
Using Form 1098-E is actually one of the easier parts of filing your taxes. When you're preparing your return, you'll report the student loan interest deduction on Schedule 1 (Additional Income and Adjustments to Income), which then flows to your Form 1040.
If you're using tax preparation software like TurboTax, H&R Block, or TaxAct, the program will ask you if you paid student loan interest during the year. You'll enter the amount from Box 1 of your Form 1098-E, and the software will calculate whether you're eligible for the deduction and how much you can claim based on your income.
If you're working with a tax professional, simply provide them with your Form 1098-E (or forms, if you have multiple), and they'll take care of the rest.
One important note: even if you didn't receive a Form 1098-E because you paid less than $600 in interest, you can still claim the deduction. You'll just need to calculate the interest yourself using your loan statements. The $600 threshold is just for when lenders are required to send the form it doesn't affect your eligibility for the deduction.
What If You Don't Receive Your Form 1098-E?
Forms 1098-E are typically mailed out by Monday, February 2nd, 2026, but sometimes they get lost in the mail or sent to an old address. If you haven't received your form by mid-February, don't panic. Most loan servicers make the form available online through your account portal. Log in to your student loan account and look for a section about tax forms or tax documents.
If you still can't find it, contact your loan servicer directly. They should be able to mail you a duplicate copy or provide it electronically. You can also calculate your interest paid by reviewing your monthly statements or payment history for the year, though getting the official form is generally easier and ensures accuracy.
Special Situations and Considerations
Voluntary Interest Payments
Here's something many people don't realize: you can deduct interest even if you weren't required to make payments. If your loans were in deferment or forbearance but you chose to make voluntary interest payments anyway, that interest still counts toward your deduction. Similarly, if you paid extra toward your loans beyond the minimum payment, all of that interest is deductible.
Capitalized Interest
When interest accrues during periods of deferment or forbearance and then gets added to your principal balance (a process called capitalization), things get a bit tricky. You can only deduct interest when you actually pay it, not when it accrues. So if interest was capitalized in a prior year and you're now making payments on the larger principal balance, the portion of your payment that's going toward that old, capitalized interest doesn't count as deductible interest in the current year.
Loan Forgiveness and Cancellation
If you have student loans forgiven or cancelled, you might receive a Form 1099-C (Cancellation of Debt) instead of or in addition to a Form 1098-E. Generally, cancelled debt is considered taxable income, though there are exceptions, particularly for Public Service Loan Forgiveness and certain other programs. This is a complex area where you might want to consult a tax professional.
Married Couples
If you're married, things can get interesting depending on how you file. If you file jointly, you can combine the student loan interest both spouses paid, though you're still subject to the $2,500 maximum deduction. If you file separately, neither spouse can claim the student loan interest deduction at all, even if you would have qualified filing jointly or as single. This is one reason why married filing separately is often less advantageous from a tax perspective.
Parents Who Co-Signed or Borrowed
If you're a parent who co-signed a student loan for your child, you might wonder if you can claim the deduction if you're the one making the payments. Generally, only the person who is legally obligated to repay the loan can claim the deduction. However, if the loan is in your name (like a Parent PLUS Loan), and your child was your dependent when you took out the loan, you can claim the deduction even if your child is now making the payments.
Common Mistakes to Avoid
One of the most common errors people make is claiming more than the maximum $2,500 deduction. Your tax software should catch this, but if you're filing by hand, make sure you don't accidentally report the full amount if it exceeds the limit.
Another mistake is claiming the deduction when you're not actually eligible. Remember, if someone else can claim you as a dependent on their tax return, you can't claim the student loan interest deduction yourself, even if they don't actually claim you. Similarly, if your filing status is married filing separately, you're out of luck for this deduction.
Some people also forget about the income limits. It's worth calculating whether you're in the phase-out range before assuming you can claim the full deduction.
Record Keeping
While you're required to keep records to back up your tax return, you don't actually need to attach Form 1098-E when you file. However, you should keep the form with your other tax records for at least three years (or longer if you prefer) in case the IRS ever questions your return.
If you paid interest but didn't receive a Form 1098-E because it was under $600, keep your loan statements showing the interest paid. These serve as your documentation for claiming the deduction.
Looking Ahead: Changes and Updates
Tax laws change periodically, and the student loan interest deduction has been modified several times over the years. The income limits are adjusted for inflation, so they increase slightly most years. It's worth checking the current year's limits when you file to make sure you're using the correct figures.
There have been various proposals over the years to expand, limit, or modify the student loan interest deduction, so it's always a good idea to stay informed about potential changes to tax law that might affect you.
The Bigger Picture
Form 1098-E is really just a tool to help you take advantage of a valuable tax benefit. While it won't make your student loans disappear, the deduction can provide meaningful tax savings, especially in the early years of repayment when more of your payment goes toward interest rather than principal.
Think of it this way: if you're already paying student loan interest (and let's face it, you probably are if you have student loans), you might as well get a tax break for it. Form 1098-E makes that process straightforward by giving you the documentation you need in a simple, standardized format.
Let’s get you in touch with an expert!
…and complete all your Federal & State Requirements. With our filing software, your goals are closer than ever!
Frequently Asked Questions
What if I paid less than $600 in interest? Can I still claim the deduction?
Absolutely. The $600 threshold is just the point at which your lender is required to send you Form 1098-E. If you paid any amount of student loan interest, you can claim the deduction (up to $2,500 maximum) as long as you meet all the other eligibility requirements. You'll just need to calculate the interest yourself using your loan statements.
I refinanced my student loans. Will I still get a Form 1098-E?
Yes, but you might receive multiple forms. You should get one from your original lender covering the interest you paid before refinancing, and another from your new lender covering interest paid after refinancing. Make sure to add up the interest from all forms when claiming your deduction, keeping in mind the $2,500 maximum.
My Form 1098-E was sent to my old address and I never received it. What should I do?
Contact your loan servicer as soon as possible. Most servicers make tax forms available through their online portals, so you can likely access it immediately by logging into your account. If not, they can mail a duplicate to your current address or email you a copy. Also, make sure to update your address with your servicer to avoid this issue next year.
Can I claim the student loan interest deduction if I'm claimed as a dependent on my parents' tax return?
No. If anyone can claim you as a dependent on their tax return even if they choose not to actually claim you you're not eligible to claim the student loan interest deduction. This rule applies even if you're the one actually making the loan payments.
I have Parent PLUS Loans that I took out for my child. Can I claim the deduction?
Yes, you can claim the student loan interest deduction on Parent PLUS Loans as long as your child was your dependent when you took out the loan and you meet all the other requirements. The loan is in your name, so you're the one who's eligible for the deduction, even if your child is helping make payments.
What's the difference between modified adjusted gross income (MAGI) and regular adjusted gross income (AGI)?
For most people, MAGI and AGI are the same number. MAGI is your AGI with certain deductions added back in. For the student loan interest deduction specifically, MAGI is your AGI without the student loan interest deduction itself, along with a few other technical adjustments that don't apply to most taxpayers. Your tax software will calculate this automatically.
My loans are in deferment and I'm not making payments. Why did I receive a Form 1098-E?
This could happen for a few reasons. You might have made voluntary interest payments during the year even though they weren't required. Or you might have made payments earlier in the year before your deferment began. The form reports interest paid during the entire tax year, regardless of your current payment status.
Do payments made by a loan forgiveness program count as interest I paid?
No. If a loan forgiveness program (like Public Service Loan Forgiveness or Teacher Loan Forgiveness) pays off part of your loans, you can't claim a deduction for interest that was paid as part of that forgiveness. You can only deduct interest that you personally paid.
I'm married and filing separately. Can I still claim the student loan interest deduction?
Unfortunately, no. If your filing status is married filing separately, you're not eligible for the student loan interest deduction at all, even if you'd otherwise qualify. This is one of several tax benefits that aren't available when using this filing status.
What if the amount on my Form 1098-E doesn't match what I think I paid?
First, review your payment history carefully. Remember that the form shows interest paid, not total payments made your payments also include principal. If you still believe there's an error, contact your loan servicer right away. They can review your account and issue a corrected form if necessary. Don't file your taxes until you've resolved the discrepancy.
Can I deduct interest on loans I took out for my spouse's education?
It depends on when you took out the loan and your marital status at that time. If you were married when you took out the loan and it was for qualified education expenses for your spouse, you can generally deduct the interest (subject to all the normal rules). If you took out the loan before you were married, things get more complicated, and you might want to consult a tax professional.
I paid off my student loans completely this year. Do I still get the deduction for the interest I paid before paying them off?
Yes! You can deduct the interest you paid during the year up until the point you paid off the loans. The fact that the loans are now paid in full doesn't disqualify you from claiming the deduction for interest paid during that tax year. In fact, that might be a nice little bonus to celebrate being debt-free.
How many years can I claim the student loan interest deduction?
You can claim it every year that you pay student loan interest and meet the eligibility requirements. There's no limit to the number of years you can take this deduction. As long as you have qualifying student loans and you're paying interest on them, you can potentially claim the deduction year after year until your loans are paid off.