You and Your Parent Both Took Out Student Loans For You – Who Gets The Credit

by Michael Lodge

From time to time we have clients where the parents took out a student loan and the child took out a student loan.  So let’s ask the question and review the answer.

Question: Last year, my parents took out a student loan for me in their name and I also took out a student loan. My parents received Form 1098-E for their loan and I also received Form 1098-E for my loan. Can we both claim the interest from the loans on our tax returns? I was not their dependent last year.

Answer:

  • Since you were not your parents’ dependent when they took out the student loan, the interest they paid on the loan does not qualify for the student loan interest deduction.
  • The student loan interest payments you made on the student loan you took out on your behalf are eligible for the student loan interest deduction, provided you meet the other requirements.

In order for a taxpayer to claim a deduction for student loan interest, the loan must be incurred for the taxpayer, their spouse, or a person who was their dependent when they took out the loan.

If you have need tax help – contact our office at:  877.778.1770