A "qualifying loan" is a loan you took out solely to pay qualified education expenses that were:
- For you, your spouse, or a person who was your dependent when you took out the loan,
- Paid or incurred within a reasonable period of time before or after you took out the loan, and
- For education provided during an academic period for an eligible student.
Loans from the following sources are not qualified student loans:
- A related person
- Your spouse
- Your brothers and sisters
- Your half brothers and half sisters
- Your ancestors (parents, grandparents, etc.)
- Your lineal descendants (children, grandchildren, etc.)
- Certain corporations, partnerships, trusts, and exempt organizations
- A qualified employer plan
Who is considered a dependent for purposes of a qualified student loan?
Generally, your dependent is someone who is either:
- A Qualifying child, or
- Qualifying relative
You can find more information about dependents in Publication 501, Exemptions, Standard Deduction, and Filing Information.
Exceptions: For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents:
- An individual can be your dependent even if you are the dependent of another taxpayer.
- An individual can be your dependent even if the individual files a joint return with a spouse.
- An individual can be your dependent even if the individual had gross income that was equal to or more than the exemption amount for the year ($4,700 for 2023).
What is considered a reasonable period of time?
Qualified education expenses are treated as paid or incurred within a "reasonable period of time" before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal post-secondary education loan program.
Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met:
- The expenses relate to a specific academic period, and
- the loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period.
If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances.
What is an academic period?
An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period.
Who is considered an eligible student?
An eligible student is someone who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study.
The standard for what is half of the normal full-time work load is determined by each eligible educational institution. However, the standard may not be lower than any of those established by the Department of Education under the Higher Education Act of 1965.