Student Loan Interest Deduction Calculator

Calculate your above-the-line student loan interest deduction and the resulting tax savings.

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How the Student Loan Interest Deduction Works

The student loan interest deduction (IRS Section 221) allows you to deduct up to $2,500 of student loan interest paid during the tax year from your gross income. Critical features: (1) Above-the-line — reduces AGI directly, available even if you take the standard deduction. (2) Phased out by income — fully available below $85,000 MAGI single / $170,000 MFJ, phases out to zero at $100,000 single / $200,000 MFJ. (3) Per return cap, not per loan or per filer — even with 5 loans, max $2,500 total. Source: IRS Section 221, Publication 970. Last updated: May 2026.

What Counts as 'Student Loan' for the Deduction?

Any loan used for qualifying education expenses for an eligible student: tuition, fees, books, room, board, transportation. Includes federal Stafford, Perkins, PLUS, FFEL, and PRIVATE student loans (as long as you can document the loan was used for qualifying expenses). Refinanced loans still qualify if the new loan is from a qualified lender. Does NOT include: loans from related parties (family), employer educational assistance plans, qualified retirement plan loans used for education.

Married Filing Separately Disqualification

If you file Married Filing Separately, you cannot claim the student loan interest deduction — full stop, no exceptions. This is a major hidden cost of MFS for couples where one spouse has substantial student debt. Always run the math: would joint filing's loss of certain MFS-favorable strategies be offset by gaining this deduction? Usually yes if the MFS spouse paid $1,500+ interest in the year.

PSLF and Income-Driven Repayment Coordination

If you're on Income-Driven Repayment (PAYE, IBR, SAVE, ICR) or pursuing Public Service Loan Forgiveness (PSLF), the interest deduction still applies to interest you actually paid. Forgiven balances (at end of 20-25 year IDR) are NOT taxable income for federal purposes through 2025 (extended by various COVID-era and OBBB provisions). PSLF forgiveness is always tax-free. State treatment varies — California, Indiana, Mississippi, and North Carolina tax forgiven amounts.