Student Loan Interest Deduction

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Student Loan Interest Deduction

A reduction in one's taxable income by the amount one spends in interest payments in the process of repaying student loans. For example, if one's student loan payments included $800 in interest for the tax year, one is does not pay taxes on that $800. The student loan interest deduction is subject to certain restrictions, such as a modified adjusted gross income under a certain amount. Additionally, one may only take the deduction if one was legally obligated to pay interest on the loan. The maximum deduction one could take was $2500 in 2008.

Student Loan Interest Deduction

An adjustment to income for interest paid during the year on qualified higher-education loans. The deduction may be limited if income exceeds a specified amount.
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