Understanding Form 1098-E: Student Loan Interest Statement and Tax Deductions

When managing student loans, understanding the tax implications is crucial. Form 1098-E, the Student Loan Interest Statement, is a vital document for those looking to deduct the interest paid on their student loans. This article elucidates the purpose of Form 1098-E, eligibility for the student loan interest deduction, and how to use the form when filing your taxes.

What is Form 1098-E?

The 1098-E form is used to report student loan interest that you’ve paid during the year. Loan servicers-companies that collect loan payments-are required to send a 1098-E to anyone who pays at least $600 in student loan interest, and they generally have to send the forms out by the end of January. It provides the amount of interest paid on eligible student loan(s) during the calendar year. If you paid over $600 in interest, you can potentially deduct it on your taxes, which can reduce your taxable income. This form is exclusively for the borrower. Form 1098-E will include all eligible interest payments received by December 31.

Accessing Your Form 1098-E

Typically, your loan servicer will provide Form 1098-E. Forms are generally available to view or download online by January 31.

Online: Log in to your account.
Check Statements: Look for a phone number on statements sent to you by the servicer.

If you do not receive Form 1098-E, call your loan servicer or log in to your online account to find out how much interest you paid.

Eligibility for the Student Loan Interest Deduction

Eligibility for the student loan interest deduction is based on your modified adjusted gross income (MAGI). This is a number you calculate when you fill out your tax return. Your deduction is reduced or eliminated at higher income brackets. You use the 1098-E to figure your student loan interest deduction.

Cosigners and Form 1098-E

Cosigners on Sallie Mae student loans will be notified of the total amount of interest paid on eligible loans, not necessarily the interest the cosigner paid. This notification is solely informative. The borrower on the loan(s) will receive the applicable tax form.

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New Tax Law Changes

The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process.

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Additional Resources

Tax Bracket Calculator: Easily calculate your tax rate to make smart financial decisions.
W-4 Withholding Calculator: Know how much to withhold from your paycheck to get a bigger refund.
Self-Employed Tax Calculator: Estimate your self-employment tax and eliminate any surprises.
Crypto Calculator: Estimate capital gains, losses, and taxes for cryptocurrency sales.
Self-Employed Tax Deductions Calculator: Find deductions as a 1099 contractor, freelancer, creator, or if you have a side gig.

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