Which Educational Institutions Qualify for the Deduction?
The expenses must be for education in a degree, certificate, or similar program at an eligible institution. An eligible educational institution is any college, university, vocational school, or other postsecondary education institution eligible to participate in a student aid program administered by the U.S. Department of Education. Certain educational institutions located outside the United States also participate in the U.S. Department of Education’s Federal Student Aid (FSA) programs and would qualify for purposes of the student loan interest deduction.
What is the Time Period for Paying Educational Expenses?
In order to be a qualified student loan for purposes of deducting interest payments, the proceeds of the loan must have been used to pay qualified higher education expenses within a reasonable period of time before or after you took out the loan. Student loans that are part of a federal student loan program meet this requirement.
The reasonable period of time condition is generally considered to be satisfied 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 the academic period and ends 90 days after the end of the academic period. This is sometimes referred to as the “safe harbor” period.
An academic period, for this purpose, can be a semester, trimester, quarter, or summer school session.
The period for deducting interest paid on a student loan is the remaining period of the loan, including after the student has graduated.