The student loan interest deduction is a tax benefit that can help offset the costs of borrowing and repaying this debt. As they file their income taxes in 2020, borrowers can deduct the interest they paid on student loans throughout the previous year, saving up to $625 on their taxes.
However, not everyone will get the full value of the student loan interest deduction. Find out how much lower your taxable income could be if you claim your student loan interest as a deduction.
Average student loan interest deduction worth $188
Student loan interest deduction 2019: High-income filers benefit the most
What is your student loan interest deduction worth?
Do you qualify for the student loan interest deduction?
Like other tax deductions, the student loan interest deduction helps you by reducing how much of your income is taxed.
In this case, your taxable income is lowered by the amount of student loan interest you paid in 2019 — up to $2,500. It can lower your tax bill by as much as $625. And that could mean paying less in taxes or getting a bigger refund.
For student loan borrowers who count on their tax refund to make ends meet or get ahead on financial goals, it can be a huge help.
However, few tax filers get the maximum $625 value of the student loan interest deduction. Here are some stats on the student loan interest deduction, per 2019 Congressional tax estimates:
- 12.1 million Americans will be eligible to claim the student loan interest deduction on their return for the 2019 tax year.
- The average dollar value of the student loan interest deduction is $188.
However, some filers get more than the average, as you can see in the table below:
|Income class||Average deduction value|
|$10,000 to $20,000||$89|
|$20,000 to $30,000||$136|
|$30,000 to $40,000||$142|
|$40,000 to $50,000||$155|
|$50,000 to $75,000||$213|
|$75,000 to $100,000||$183|
|$100,000 to $200,000||$214|
|$200,000 and over||$74|
Filers who earn above $50,000 benefit the most from claiming the student loan interest deduction. And the highest average student loan interest deduction ($214) is claimed by those earning both more than $100,000 and less than $10,000.
The fact that in most of the above cases, higher earners benefit the most from the student loan interest deduction is likely the result of a couple of factors. First, those who pay student loan interest and qualify for this student loan interest deduction are more likely to have a college degree and earn a higher income.
Additionally, low-income borrowers might pay less interest if they’re taking advantage of repayment options such as deferment and forbearance or income-driven repayment plans. These repayment plans lower the payments borrowers make, sometimes to $0. If those borrowers pay little on student loans, they won’t have much student loan interest to claim.
Whatever your income level, if you paid student loan interest last year, you should look into claiming a student loan interest deduction for 2019. If not, you could lose out on getting some of that money back.
As you work to prepare your taxes, you might want to better understand the value of your student loan interest deduction for 2019.
The average value of this tax benefit is $188. But the value of your student loan interest deduction will depend on the specifics of your situation. From how much interest you paid in the past year to the rate at which your income is taxed, your own student loan and tax details are key.
Fortunately, our student loan interest deduction calculator can quickly and easily estimate your personal savings if you claim this tax benefit. Using this tool can give you a more accurate idea of what kind of tax refund you can expect to get back.
Interest Deduction Calculator
The IRS makes clear who can and can’t claim the student loan interest deduction. Here are some factors that affect whether you’re eligible to claim the student loan interest deduction in 2020 for the 2019 tax year:
- Your income: This tax deduction is phased out at $85,000 modified adjusted gross income (MAGI) for single filers and $170,000 MAGI for filers who are married and filing jointly.
- Filing status: You can’t claim the student loan interest deduction if you’re claimed as a dependent on someone else’s return or if you’re married but filing separately. What won’t matter is whether you’re taking a standard or itemized deduction. The student loan interest deduction is an “adjustment to income,” according to the IRS, and can be claimed either way.
- Qualified student loan: You must have paid interest on a student loan that was initially borrowed to fund qualifying educational expenses. Both federal and private student loans can qualify, but student loans from a family member can not.
- Student loan interest paid: You must have paid the interest on the qualified student loan during 2019, and it must have been on student loans you’re legally obligated to pay. Both prepaid student loan interest and loan origination fees can be claimed and deducted as interest paid.
The last point might be the trickiest since the person repaying a student loan isn’t always the person who owns it. Here’s when filers can and can’t claim the student loan interest tax deduction:
- Can’t claim: If a student loan is in your name but your parents are making the payments, your parents can’t claim the interest they paid since they’re not the legal owners of the loan.
- Can’t claim: You can’t claim the student loan interest tax deduction if someone else, such as a parent, is making payments, even if your name is on the loan.
- Can claim: Your parents can deduct interest they paid on student loans they cosigned with you since their names are on those loans.
- Can claim: You can claim interest you paid on student loans that are in your name, whether they were taken out to pay for your education or someone else’s.
If you paid more than $600 in interest charges on your student debt in 2019, you’ll get a 1098-E outlining the student loan interest you paid. Using the info from your 1098-E, you can claim your student loan interest deduction for 2019 and get the full benefit you’re entitled to.
If you didn’t receive a 1098-E from your lender, don’t worry. You can still claim your interest, but you might have to do some extra legwork to determine how much student loan interest you paid:
- Take a look at your account summary or payment statements for each student loan servicer you’re paying back to find out how much interest you paid in 2019.
- If that information isn’t readily available, contact each student loan servicer and ask for this figure.
With this information in hand, you can claim your student loan interest deduction when filing your 2019 tax return. Then comes the fun part: deciding on the smartest way to spend your 2019 tax refund.
This blog does not provide tax or accounting advice. If you need tax and/or accounting advice, please contact an accountant directly.
Andrew Pentis contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 8.70%1||Undergrad & Graduate|
|1.74% – 7.99%2||Undergrad & Graduate|
|1.74% – 7.99%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.74% – 7.99%5||Undergrad & Graduate|
|2.05% – 5.25%6||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|N/A7||Undergrad & Graduate|
|1.99% – 8.38%8||Undergrad & Graduate|
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.
3 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for Navient.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
7 Important Disclosures for PenFed.
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
8 Important Disclosures for Citizens.
Education Refinance Loan Rate Disclosure: Variable interest rates range from 1.99%-8.38% (1.99%-8.38% APR). Fixed interest rates range from 2.99%-8.63% (2.99%-8.63% APR).
IS Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.
ERL Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of May 1, 2022, the 30-day average SOFR index is 0.29%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.