Higher Education Tax Benefits: Do You Qualify?


Its tax season and whether you are an undergraduate, graduate student, taking professional degree courses, or a parent, you may be eligible for one or more higher education tax credits and deductions. Sallie Mae, the nations saving, planning, and paying for college company, has tips to help families understand and take advantage of these sometimes-overlooked benefits.

Higher education tax deductions and credits are an effective way to reduce your college costs, said Martha Holler, senior vice president, Sallie Mae. The key is to understand whats available, determine eligibility, and take action to ensure no money is left on the table.

Heres what families need to know about available higher education tax benefits:

  • The American opportunity (AOC) tax credit. Students enrolled at least half time in a program leading to a degree or other recognized educational credential may be eligible for a tax credit of up to $2,500 per year in tuition, enrollment fees, and course materials expense during the students first four years of higher education. Single filers with a modified adjusted gross income (MAGI) of up to $90,000 and married filers with a MAGI up to $180,000 may qualify for this credit.
  • The lifetime learning credit (LLC). Covers up to $2,000 per year in expenses related to all years of post-secondary education, as well as non-degree courses to acquire or improve job skills, and there is no limit on the number of years it may be claimed. For 2018, the amount is gradually reduced if MAGI is between $57,000 and $67,000 ($114,000 and $134,000 if you file a joint return). Important Note: Either the American opportunity credit or the lifetime learning credit may be claimed in one tax year, but not both.
  • Student loan interest deduction. Taxpayers with federal or private student loans may be eligible to deduct up to $2,500 of interest as an adjustment to taxable income. The student must be enrolled at least half time in a program leading to a degree or other recognized educational credential. Single filers with a MAGI of between $65,000 and $80,000, and joint filers with a MAGI between $135,000 and $165,000 may qualify for this deduction. Important Note: The tuition and fees deduction expired in 2017. Consult a tax professional or visit IRS.gov to see if this deduction has been extended for 2018.
  • Tuition waivers for graduate students. Graduate students with qualified tuition reductions do not have to report the value of the reduction as taxable income.
  • Expanded eligibility for 529 savings plans (Qualified Tuition Program). Beginning Jan. 1, 2018, 529 plan savings may be used for qualified education expenses of up to $10,000 per student per year at elementary and secondary public, private, or religious schools.

Information in this release is not intended to provide, nor should it be relied on, for tax, legal, or accounting advice. For more information on eligibility for higher education tax deductions and credits, consult IRS Publication 970, Tax Benefits for Higher Education, or a personal tax advisor.

Find additional information on saving, planning, and paying for college at SallieMae.com.

Sallie Mae (Nasdaq: SLM) is the nations saving, planning, and paying for college company. Whether college is a long way off or just around the corner, Sallie Mae offers products that promote responsible personal finance, including private education loans, Upromise rewards, scholarship search, college financial planning tools, and online retail banking. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

Antoine L. Oakley
[email protected]