Student loan interest is deductible. It is an above the line deduction, which means you do not need to itemize. This is different from deducting mortgage interest, which requires you to itemize. This makes deducting your student loan interest easy to do and nearly everyone with a student loan can take advantage of this deduction. The loan must be for qualified college expenses.
In order to deduct your student loan interest you will need the 1098-E form that your student loan company will send you. This often comes with your monthly statement, so you should check your statement carefully. Additionally you will need to file form 1040 Schedule A. You cannot use 1040EZ and still claim the deduction. If you are doing your taxes yourself you will just follow the instructions on the form. If you are taking your taxes to an accountant you need to be sure to take the form 1098-E with you to your accountant.
There is a $2500 limit on the amount of interest you can claim each year, if you make $55,000 or less and you are single. However, if you make more than that the amount you can claim is lowered on a tiered system. If you make more than $70,000 and you file single, you cannot claim the deduction. The amounts double for those claiming the married filling jointly status on their income taxes. You are ineligible if you file married filing separately.
Although it may seem like a good idea to hold on to your student loans to have the tax benefit, you should realize that it is a better idea to pay them off. Paying your student loans off will free up money in your budget and give you the opportunity to begin investing that money and earning interest. You will save more money that way than you will save on paying your taxes.