Quick answer

Parents can deduct student loan interest when three basic conditions are met: (1) the loan is a qualified student loan used for higher education expenses, (2) the parent is legally obligated to pay the loan (borrower, co‑borrower or otherwise legally responsible), and (3) the parent actually paid the interest and meets the income phase‑out limits. The interest deduction is an above‑the‑line deduction (reduces your adjusted gross income) of up to $2,500 per tax return for those who qualify (see IRS guidance for details) (IRS Topic No. 456; IRS Publication 970).

Who can claim the deduction: borrowers, co‑signers, and payers

  • Borrower or co‑borrower: If parents took out the loan in their names or co‑signed and are legally liable, they are treated as the borrower for tax purposes and can claim the deduction if they paid the interest.
  • Parent who pays a child’s loan: If the child is the named borrower, the parent cannot claim the deduction simply because they made payments unless the parent is legally liable. The IRS looks at legal responsibility for the debt, not who handed over the check.
  • Special situations: Court‑ordered or settlement payments made by a parent might be treated differently; consult a tax advisor for court orders or divorce agreements.

In practice: I regularly see parents who assume paying a child’s loan qualifies them for the deduction. In my experience, if you are not the borrower or co‑borrower, paying the loan does not make you eligible to claim the student loan interest deduction. Documentation of legal liability matters when the IRS questions a return.

What qualifies as a “qualified student loan”

A qualified student loan is one used solely to pay qualified higher education expenses (tuition, fees, room and board if required by the school) for an eligible student. Qualified student loans include most federal student loans and many private education loans. Loans taken out for non‑education reasons (for example, to buy a car) do not qualify for the deduction. See IRS Publication 970 for the full definition and examples (IRS Publication 970).

Income limits and phase‑out (how MAGI affects eligibility)

The student loan interest deduction phases out based on your modified adjusted gross income (MAGI). For example, for tax year 2023 the phase‑out ranges were $70,000–$85,000 for single filers and $140,000–$170,000 for married filing jointly. These thresholds are adjusted periodically. Always check the current year’s IRS guidance before filing (IRS Topic No. 456).

If your MAGI is in the phase‑out range, the deductible amount is reduced; once your MAGI exceeds the upper limit you cannot claim the deduction at all. Because the deduction is an above‑the‑line adjustment, it reduces AGI, which can help with other tax benefits tied to AGI thresholds.

How to claim the deduction and required paperwork

  • Receipts and records: Keep bank statements and loan servicer statements showing payments and interest charged. These records are essential if the IRS requests proof of payment or legal responsibility.
  • Form 1098‑E: Your loan servicer should send Form 1098‑E if you paid $600 or more in interest in a calendar year. Even if you don’t receive a 1098‑E, you may still deduct interest you can document. See your servicer or loan account statements for total interest paid.
  • Tax return reporting: Claim the deduction on Form 1040 as an adjustment to income—there’s no requirement to itemize to benefit.

Authoritative guidance: The IRS describes the deduction and reporting requirements in Topic No. 456 and Publication 970 (IRS Topic No. 456; IRS Publication 970).

Examples (practical illustrations)

Example 1 — Parent is the borrower:

  • Parent A took a private student loan in their own name to pay for their child’s college. In 2023 Parent A paid $1,800 in interest. Parent A’s MAGI is below the phase‑out range. Parent A may deduct the $1,800 as student loan interest on their 1040.

Example 2 — Parent pays child’s loan but is not legally liable:

  • Parent B paid $2,200 toward their adult child’s federal loan account. The child is the named borrower and legally responsible. Because Parent B is not legally obligated on the loan, Parent B generally cannot claim the deduction even though they made the payments. The child, if they repaid the interest and met the income limits, would be eligible to claim the deduction instead.

Example 3 — Co‑signer who pays:

  • Parent C co‑signed a private loan and is legally liable. Parent C makes the payments and pays $1,200 in interest. Parent C may claim the deduction if MAGI limits permit.

Divorce, separation, and court orders: who claims the deduction?

Legal agreements can complicate who may claim the deduction. If a divorce decree requires one parent to pay a child’s college bills, IRS rules still look to who is legally obligated on the loan contract. That means:

  • If the paying parent is not the borrower on the promissory note or not legally liable per the loan contract, they typically cannot claim the deduction—even if a divorce decree requires them to pay.
  • If the loan instrument names the parent as the borrower or co‑borrower, that parent may claim the deduction if other rules (income, qualified loan) are satisfied.

When divorce decrees and loan contracts conflict, keep clear records and ask a tax professional to determine the proper filer.

Common mistakes and how to avoid them

  • Claiming the deduction without legal liability: Don’t assume payments alone create eligibility. Verify borrower status on the loan contract.
  • Failing to document payments: Keep bank statements and servicer records showing payments and interest paid.
  • Ignoring phase‑out rules: Check current MAGI limits each filing year. Using outdated thresholds can create unexpected tax exposure.
  • Counting principal as interest: Only interest paid is deductible.

Tax planning tips for parents

  1. Verify borrower status before paying: If your goal is a tax deduction, consider taking the loan in your name or co‑signing while understanding the credit and liability risks. See our guide on How cosigning differs between personal and student loans for trade‑offs.
  2. Track interest annually: Aim to collect Form 1098‑E from servicers or maintain your own ledger of interest paid.
  3. Consider tax timing: If you’re near a MAGI threshold, moving or accelerating payments in a tax year can affect eligibility. Run the numbers or consult a tax preparer before making strategic moves.
  4. Look at refinancing carefully: Refinancing a federal student loan into a private loan can change eligibility and borrower protections. Review risks and tax consequences—see our article on Student loan refinancing with a personal loan: risks to consider for guidance.

Related resources on FinHelp

Final checklist for claiming student loan interest as a parent

  • Confirm you are legally liable on the loan (borrower or co‑borrower).
  • Confirm the loan is a qualified student loan used for education expenses.
  • Gather proof of interest paid (Form 1098‑E, servicer statements, bank records).
  • Verify your MAGI is within allowed limits for the tax year.
  • Claim the deduction on Form 1040 as an adjustment to income; no itemizing required.

Sources and further reading

Professional disclaimer: This article is educational and does not constitute tax or legal advice. Tax rules change and thresholds are adjusted periodically. For advice tailored to your situation, consult a CPA, enrolled agent, or tax attorney.

Author note: In my practice as a financial planner who has worked with families on higher‑education funding and tax planning, clarifying who is legally responsible for a loan is the most common and consequential factor in whether parents can claim the student loan interest deduction. Keeping clear documentation and checking current IRS guidance every filing season will reduce the chance of unpleasant surprises.