Why you received it
Student-loan interest reported by a lender or loan servicer
Income-document guide
Form 1098-E: Student Loan Interest Statement
Use Form 1098-E to support the above-the-line student-loan interest deduction when the borrower, loan and income requirements are met.
Where it usually flows
- • Schedule 1 (Form 1040), student loan interest deduction
- • Form 1040 adjusted gross income
Fields and records to check
- Interest reported by each servicer
- Qualified education loan status
- Borrower dependency rules
- MAGI phaseout and filing status
How Form 1098-E works
The deduction is capped at $2,500 per return regardless of how many loans or how much interest was actually paid, and it phases out based on modified adjusted gross income (MAGI) rather than being an all-or-nothing cliff. For 2026, the phase-out runs from $85,000 to $100,000 MAGI for single filers and $175,000 to $205,000 for married filing jointly; married filing separately taxpayers cannot claim the deduction at all regardless of income. A qualified education loan generally must have been taken out solely to pay qualified higher education expenses for the taxpayer, spouse, or a dependent at the time the debt was incurred — a loan later refinanced still generally qualifies if the original loan did. The deduction is claimed as an adjustment to income on Schedule 1, so it reduces AGI whether or not the taxpayer itemizes, which is a meaningfully better position than an itemized deduction for someone who takes the standard deduction. Interest paid by a third party, such as a parent, on a loan the student is legally obligated to repay can still be deductible by the student if the student isn’t claimed as a dependent — the IRS treats the payment as a gift to the student followed by the student’s own payment. MAGI for this deduction is not simply the AGI shown on Form 1040; for most filers it equals AGI computed before the student loan interest deduction itself, with certain foreign-income exclusions (foreign earned income, foreign housing, and the Puerto Rico or American Samoa income exclusions) added back, a detail that only matters for taxpayers claiming those specific exclusions.
Worked example
A single filer has $1,800 in student loan interest reported on Form 1098-E and $92,500 MAGI for 2026. That MAGI sits exactly halfway through the $85,000 to $100,000 phase-out range, so half of the interest is disallowed and half remains deductible: a $900 student loan interest deduction on Schedule 1, well under the $2,500 cap.
Form 1098-E FAQs
Is all reported student-loan interest deductible?
Not necessarily. The deduction is limited and can phase out by MAGI. Married filing separately taxpayers generally cannot claim it.
Do I have to itemize?
No. Student-loan interest is an adjustment to income rather than a Schedule A itemized deduction.
Does refinancing a student loan affect the deduction?
Generally not, as long as the original loan was a qualified education loan used solely for qualified higher education expenses. Refinancing into a new loan doesn’t disqualify the interest, but review the specific loan terms.
Sources
Related Calculators
Student Loan Interest Deduction
$2,500 cap §221 above-the-line, MAGI phase-out $85k-$100k single / $175k-$205k joint
Student Loan Repayment
Compare RAP, Tiered Standard, IBR, or Standard based on the July 1, 2026 loan-date rules
AGI Calculator
Adjusted gross income line by line: total income minus the Schedule 1 above-the-line deductions