Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Adjustments to Income Workout

Student Loan Interest

Case Study 3: Who Can Claim the Deduction?

Darla obtained a qualified student loan to attend college. After Darla's graduation from college, she worked as an intern for a nonprofit organization.

As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. This payment was treated as additional compensation and reported in box 1 of her Form W-2.

Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return.