Tax Incentives

Federal tax laws provide special benefits to help students and parents pay for college. For example, a tax credit allows you to subtract an amount from the taxes you owe:

Taxes owed  $6,000
Less tax credit $1,000
Taxes owed  $5000
A tax deduction allows you to subtract an amount from the income on which you must pay taxes:
Gross income   $25,000
Less tax deduction $1,000
Taxable income $24,000

Below are brief summaries of the tax incentives most likely to benefit adult students. Not all students or parents will qualify for these tax credits. Be sure to obtain a complete explanation of these tax incentives and consult with your tax advisor before you make financial decisions or use them in filing your federal income taxes.

American Opportunity Tax Credit

The American Opportunity tax credit allows you to reduce your federal income tax by as much as $2,500 for out-of-pocket tuition, fees and qualified books, supplies and equipment.

Lifetime Learning Credit

Up to $2,000 per return may be claimed for qualified educational expenses.

Student Loan Interest Deduction

The maximum interest deduction is $2,500. The loans must have been used to pay qualified costs of attendance, including room and board.

Loan Forgiveness

For certain curricula, there are loan forgiveness programs available. You need to research these programs carefully, as there are often strict criteria associated with loan forgiveness programs. For more information, visit or