Student Loan Interest Deduction (1098-E)

KU Endowment Association provides borrowers with an IRS Form 1098-E to report the amount of interest which may be deductible. Launch Servicing mails the 1098-E on behalf of KU Endowment Association.  This interest may be declared on either IRS Form 1040 or Form 1040A. You are not required to itemize to receive the deduction.

The interest you pay is an “above the line” adjustment, which means that it is subtracted from your income before the deductions (standard or itemized) or exemptions, so it lowers your adjusted gross income.

The maximum amount of a deduction in one year is $2,500 for 2001 and beyond. Deductions prior to the 2002 tax year were limited to only the first 60 months of repayment but need not be consecutive. In tax year 2002, the 60-month limitation was lifted.

There are also limits to your adjusted gross income which may influence the amount of a deduction you may take. The amount of your deduction will be gradually reduced if your modified adjusted gross income is between $55,000 and $70,000 ($110,000 and $140,000 if you file a joint return). You will not be able to take a deduction if your modified adjusted gross income is $70,000 or more ($140,000 or more if you file a joint return).

KU Endowment Association is required to send an IRS Form 1098-E if you pay more than $600 in interest for any tax year. A 1098-E is provided regardless of the amount of interest paid during the tax year. 1098-E information can be found on your monthly billing statement. The 1098-E also considers the 60-month limitation for tax years prior to 2002. All tax information is submitted electronically to the IRS. 

As with most adjustments, the student loan interest deduction has some restrictions. You may want to consult a tax professional, or contact the IRS for further guidance.