Qualifying education expenses are the costs of attending an eligible educational institution, including colleges, universities, vocational schools, and graduate programs that participate in federal student aid programs.
These expenses are important because they're used to determine eligibility for education tax benefits such as the American Opportunity Credit, Lifetime Learning Credit, and certain student loan-related tax benefits.
What Expenses Qualify?
Qualifying education expenses generally include amounts paid for:
- Tuition
- Required enrollment fees
- Books
- Supplies
- Equipment required for your courses
- Other necessary educational expenses required by the school or program
Depending on the tax benefit you're claiming, some rules for books and supplies may vary. For example, the American Opportunity Credit generally allows more flexibility than the Lifetime Learning Credit when it comes to course materials purchased outside the school.
What Expenses Do Not Qualify?
The following costs are generally not considered qualifying education expenses:
- Insurance premiums
- Medical expenses, including student health fees
- Room and board
- Transportation costs
- Personal living expenses
- Family living expenses
- Sports, games, or hobby courses that are not part of a degree or credential program
- Noncredit courses, unless they're part of an eligible degree or certificate program
Even if these expenses are required or helpful for attending school, the IRS doesn't consider them qualified education expenses for most education-related tax benefits.
How Do Scholarships and Grants Affect Qualified Expenses?
If you receive tax-free educational assistance, such as:
- Scholarships
- Grants
- Employer-provided educational assistance
- GI Bill benefits used for tuition
- Other tax-free educational benefits
you generally must reduce your qualified education expenses by those amounts before calculating an education credit.
For example, if you paid $6,000 in qualified tuition and received a $2,000 tax-free scholarship, your remaining qualified expenses would generally be $4,000.
How Do I Determine My Qualified Expenses?
Most taxpayers will use Form 1098-T, Tuition Statement, as a starting point.
Review:
- Box 1 for payments received for qualified tuition and related expenses.
- Box 5 for scholarships and grants received.
Your final qualified expense amount may be different from what appears on Form 1098-T because you may need to:
- Add eligible books, supplies, or equipment.
- Subtract scholarships, grants, GI Bill tuition benefits, and other tax-free assistance.
2026 Tax Year Guidance
For tax year 2026 returns filed in 2027, keep records of:
- Form 1098-T
- Tuition bills and payment receipts
- Book and supply purchases
- Scholarship and grant documentation
- GI Bill or other educational assistance records
These documents can help support any education credits or deductions claimed on your return.
Key Takeaway
Qualifying education expenses generally include tuition, required fees, books, supplies, equipment, and other necessary educational costs paid to attend an eligible educational institution. Expenses such as room and board, transportation, insurance, and personal living costs don't qualify. If you received scholarships, grants, or other tax-free educational assistance, you'll generally need to reduce your qualified expenses by those amounts before calculating an education tax benefit.
Please refer to Publication 970 Tax Benefits for Education for more information.