Form 1098-E, Student Loan Interest Statement, is the form a lender sends you if you paid $600 or more of interest on qualified student loans during the year. You use the box 1 figure to work out the student loan interest deduction, which can cut your taxable income by up to $2,500 without itemizing. For 2025 the deduction phases out between $85,000 and $100,000 of modified AGI, or $170,000 and $200,000 on a joint return.
The form tells you what you paid. It doesn't tell you what you can deduct, and the lender is told not to explain that part. Everything below comes from the IRS instructions for Forms 1098-E and 1098-T, the borrower instructions on Form 1098-E, and Chapter 4 of Publication 970 for 2025 returns, checked in October 2026.
Who sends a 1098-E, and when you won't get one
A financial institution, government unit, educational institution or any other person that receives $600 or more of student loan interest from an individual in the course of its trade or business must file the form. The $600 test applies per borrower, across all of that borrower's loans with the lender, and the lender can send one form for all of them or one per loan.
So if you paid less than $600 to a lender, you may not get a 1098-E at all. That doesn't stop you deducting the interest you paid; you just work from your own records or your loan account.
What the boxes mean
| Box | What it shows |
|---|---|
| Box 1 | Student loan interest the lender received from you in the year. For loans made on or after September 1, 2004, it includes capitalized interest and loan origination fees that count as interest |
| Box 2 | Checked if origination fees or capitalized interest are not included in box 1, for loans made before September 1, 2004 |
| Account number | May show the lender's account number for you |
| Your TIN | May show only the last four digits, though the lender reported the full number to the IRS |
The deduction at a glance
| Feature | Rule for 2025, as of October 2026 |
|---|---|
| Maximum | $2,500 off your income subject to tax |
| How it's claimed | As an adjustment to income, so you don't need to itemize |
| Loan | Taken out solely to pay qualified education expenses; not from a related person or a qualified employer plan |
| Student | You, your spouse or your dependent, enrolled at least half-time in a program leading to a degree, certificate or other credential |
| Income phaseout, single | Reduced between $85,000 and $100,000 of modified AGI; none at $100,000 or more |
| Income phaseout, joint | Reduced between $170,000 and $200,000; none at $200,000 or more |
Student loan interest includes both required and voluntary interest payments. And there's no double benefit: you can't deduct interest your employer paid for you after March 27, 2020 under an educational assistance program.
Who can claim it
- Any filing status except married filing separately.
- No one else is claiming you as a dependent on their return.
- You're legally obligated to pay interest on a qualified student loan, and you paid it.
Pub. 970's two examples show why the dependent rule matters. You pay $600 of interest, nobody claims you as a dependent, and you can deduct the $600. You pay $1,100 of interest, but your parents claim you as a dependent, and neither you nor your parents can deduct it.
How to use your 1098-E
- Add up box 1 from every 1098-E you received, plus any interest you paid to lenders that didn't send one.
- Check box 2. If it's checked, origination fees or capitalized interest may need to be added from your own records.
- Confirm the loan qualifies and the student met the enrollment rule when the loan was taken out.
- Work out your modified AGI and use the Student Loan Interest Deduction Worksheet in the Form 1040 instructions.
- Enter the result on Schedule 1 (Form 1040), the student loan interest deduction line, capped at $2,500.
The form's borrower instructions are blunt about one thing: you may not be able to deduct the full amount shown, and you shouldn't contact the lender for an explanation of the deduction. Use Pub. 970 and the worksheet instead. If you overstate the deduction, a negligence penalty or other sanction may apply.
Tuition itself is reported on a different form, Form 1098-T, which feeds the education credits rather than this deduction. And mortgage interest comes on Form 1098, which is easy to confuse with the 1098-E by name alone.
Common 1098-E questions people get wrong
- Thinking the 1098-E amount is the deduction. It's the interest paid; the deduction is capped at $2,500 and limited by income.
- Waiting for a form under $600. If the lender didn't send one, you can still deduct qualifying interest you paid.
- Claiming interest on a loan from a relative. Loans from a related person don't qualify.
- Assuming parents can claim interest on a loan in the student's name. The loan has to be one you took out, for you, your spouse or your dependent at the time.
The verdict
When your 1098-E arrives, treat box 1 as the starting figure, not the answer. If your income is under the phaseout range, you'll usually be able to take up to $2,500 straight off your income without itemizing. If you're inside the range, run the worksheet; above it, the deduction is gone, whatever the form says.
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Frequently asked questions
What is Form 1098-E?
A statement from your lender showing the student loan interest you paid during the year, sent when the interest is $600 or more.
How much student loan interest can I deduct?
Up to $2,500, as an adjustment to income, subject to the modified AGI phaseout.
What are the 2025 income limits for the student loan interest deduction?
It's reduced between $85,000 and $100,000 of modified AGI, or $170,000 and $200,000 on a joint return, and eliminated at $100,000 or $200,000 and above.
Why didn't I get a 1098-E?
Lenders only have to send one if you paid $600 or more of interest to them in the year. You can still deduct qualifying interest you paid below that.
Does box 1 include capitalized interest?
For loans made on or after September 1, 2004, box 1 includes capitalized interest and loan origination fees that count as interest.
Do I need to itemize to claim student loan interest?
No. It's claimed as an adjustment to income, so you can take it with the standard deduction.
