Can Parents Deduct Student Loan Interest? PLUS Loans and Income Limits

Parents can deduct student loan interest only when they are the legal borrower on the loan. If you took out a federal Parent PLUS loan, or you co-signed a private education loan for your child, you’re on the hook for the debt and you can deduct up to $2,500 of interest per year, subject to income limits. If the loan is only in your child’s name and you’re simply helping with payments, you can’t claim anything, even if every dollar of interest came out of your account. Who signed the promissory note controls the deduction; who writes the check does not.¹

Parent PLUS Loans: The Clean Case

A federal Parent PLUS loan is the most straightforward path to the deduction for a parent. The parent signs the promissory note, so the parent is the legal borrower. That satisfies the legal-obligation requirement in the tax code, and Parent PLUS debt qualifies as a “qualified education loan” because it was incurred to pay higher education expenses for the borrower’s dependent.²

The student cannot claim this deduction, even if the student has taken over the payments after graduation. Only the person named on the loan agreement can deduct the interest.¹

Paying on a Loan in Your Child’s Name

This is where most families lose the deduction. Your child borrowed the money, federal or private, in their own name. You help by making some or all of the payments. You are not legally obligated to repay that loan, which means you fail the threshold test.

The IRS treats what you’re doing as two separate transactions: you gave the money to your child, and your child paid the interest. Under that deemed-payment rule, the student is the only person who can potentially claim the deduction.¹

There’s a further catch. A student cannot claim the deduction if someone else claims them as a dependent. So if your child is still your dependent and the loan is in their name, no one gets the deduction. You can’t take it because you’re not the borrower, and your child can’t take it because they’re your dependent. Some families come out ahead by letting the student file independently so the student can claim the interest, but that trade depends on what the dependency and related credits are worth to you compared to a deduction capped at $2,500.

Co-Signed Private Loans

When you co-sign a private student loan, you and your child are both legally obligated. That means either of you can, in principle, satisfy the legal-liability test. The deduction still follows the money: only the person who actually made the interest payment can claim it, and only for the interest they personally paid. The interest isn’t split between you, and it isn’t doubled.¹

If your child is making the payments on a loan you co-signed, your child gets the deduction (again, only if no one is claiming them as a dependent). If you’re making the payments, you get the deduction.

Income Limits for 2026

Even a parent who clearly qualifies as the legal borrower can lose the deduction to income limits. For the 2026 tax year, the phase-outs are:³

Single filers: the deduction begins phasing out at a modified adjusted gross income of $85,000 and disappears entirely at $100,000.
Married filing jointly: the phase-out begins at $175,000 and the deduction is fully gone at $205,000.

Inside the phase-out range, you lose a proportional slice. A single filer with a MAGI of $92,500, halfway through the range, keeps half the deduction. Above the top of the range, nothing.

This bites parents especially hard. A working parent in their peak earning years is more likely than a recent graduate to sit above the ceiling. A parent with a MAGI over $100,000 filing single, or over $205,000 filing jointly, gets zero from the deduction even on a Parent PLUS loan where the legal-borrower question is beyond doubt.

The Other Baseline Rules

Assuming you’re the legal borrower and your income is in range, a few other requirements still apply. The deduction is capped at $2,500 per year, or the total qualifying interest you actually paid, whichever is less.⁴ It’s an above-the-line deduction, so you take it whether or not you itemize; it reduces your adjusted gross income directly.¹

You also cannot be claimed as someone else’s dependent (rarely an issue for parents), and you cannot file as married filing separately. Married couples who file separate returns are completely locked out of the deduction, regardless of how much interest either spouse paid.⁴

Loans That Don’t Qualify

Two kinds of borrowing look like education debt but don’t count. Loans from a related person, meaning a parent, grandparent, or other family member as defined broadly by the IRS, are excluded. So are loans taken from a qualified employer retirement plan to pay tuition.² Refinanced and consolidated student loans do still qualify, provided the original debt was itself a qualified education loan and the new lender isn’t a family member.

How to Claim It

The deduction goes on Schedule 1 (Form 1040), Line 21, as an adjustment to income. If your income lands inside the phase-out range, use the Student Loan Interest Deduction Worksheet in the Schedule 1 instructions to figure the reduced amount.¹

Your loan servicer will send you Form 1098-E if you paid $600 or more in student loan interest during the year.⁵ Under $600, the form is optional for the servicer, but the deduction is still available if you can document the interest yourself. If you didn’t receive a 1098-E and you know you paid interest, request a statement from the servicer before you file.

1
Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education
2
Office of the Law Revision Counsel. 26 USC 221 – Interest on Education Loans
3
Internal Revenue Service. Revenue Procedure 2025-32
4
Internal Revenue Service. Topic No. 456, Student Loan Interest Deduction
5
Internal Revenue Service. About Form 1098-E, Student Loan Interest Statement