Federal Tax Information

The IRS Publication 970 (pdf) publication explains tax benefits that may be available to you if youa re saving for or paying education costs for yourself or another student who is a member of your immediate family.  Most benefits apply only to higher education.  This publication is updated every year.

Are Your Education Benefits Taxable?

Many, but not all, types of educational assistance are tax-free. A scholarship or fellowship is tax-free if:

  • You are a degree candidate at an eligible educational institution
  • You use the assistance to pay qualified education expenses (e.g., tuition, fees, books, supplies, and equipment). Room and board and travel are NOT qualified educational expenses.
  • In general, if you have taxable income from any of your education benefits and the payer does not withhold enough income tax, you may be required to make estimated tax payments.

Student Loan Interest Deduction

Generally, interest other than certain mortgage interest, is not deductible on your tax return. However, if your modified gross adjusted income (MAGI) is less than $75,000 (individual) or $150,000 (filing jointly), you can reduce the amount of your income that is subject to tax by up to $2,500 with a student loan interest deduction.

Please see www.irs.gov for additional information or IRS help line at (877) 829-5500.

Databases of Available Scholarship and Loan Programs

Loan Consolidation Programs

Information about how to bring together all your educational loans and manage resources more efficiently.

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