Tax Incentives for Financial Aid

Student Loan Interest Deduction: It is possible that you might be able to deduct up to $2,500 that you paid in interest on your student loan during the tax year. You will not be eligible if your Adjusted Gross Income is greater than $50,000.

IRA Withdrawals: You may withdrawal monies from a qualified IRA to pay for higher education expenses without incurring the 10 percent penalty for withdrawing before reaching the age of 59-1/2. You will still be taxed ordinarily on the money withdrawn.

Lifetime Learning Tax Credit: This is an IRS program where you may be able to claim the money you spent for higher education expenses on your taxes. For complete documentation on this tax program, visit the Lifetime Learning Tax site.

Hope Scholarship Credit: This is similar to the Lifetime Learning Tax Credit but you must be enrolled at least half-time at an eligible institution. For complete documentation on this tax program, visit the Hope Scholarship Credit portion of the IRS web site.

Education IRA's: You may deposit up to $500 a year into an Education IRA tax-free. When the student withdraws the money it will not be subject to penalty or tax if it is used for educational expenses.

This page is for information only, for tax advice, see a tax professional or visit the IRS web site.

Financial Aid Update - Are you still waiting for your tax relief check from the IRS? If so visit our tax relief page and find out what possibly happened.