Beginning January 1, 1998, taxpayers who have taken
student loans to pay the cost of attending
an eligible educational institution for themselves, their spouse, or their dependent
generally may take a tax deduction for the interest they pay on these student
loans on their tax return.An
annual tax deduction of up to $2,500 in 2009 is available for interest paid
on tax qualified education loans. Because the tax deduction is claimed on Line
33 of Form 1040 and
Line 18 of Form 1040A it is available regardless of whether you itemize
tax deductions on your tax return (i.e.,
the tax deduction is "above the line").
You cannot claim the student
loan interest
tax deduction on your tax return in any tax year you are claimed as a dependent by
another taxpayer; if you are married and file a separate tax return; on
student loan interest paid to a
related person; or for any amount that you deduct for tax purposes on your
tax return under any other provision of the tax
law.
A tax qualified student loan is defined as indebtedness incurred to pay for the qualified
higher education expenses of the taxpayer, a spouse, or any other dependent in attending a
college, university, post-secondary educational institution, certain vocational schools,
or other institutions eligible to participate in Department of Education student aid
programs.
You must carry at least one half the normal full time student work load and you must be
enrolled in a degree, certificate, or other program leading to a recognized educational
credential.
Qualified educational expenses generally include:
Your Federal Income Tax. 
