Debt Reduction Guidance
Taxpayer Relief Act of 1997
The Treasury Department has published IRS Notice 98-7: Returns Relating to Interest on Education Loans, which provides guidance to loan holders on the implementation of the student loan interest provision.
The provision allows:
- Qualified student loan borrowers to deduct interest paid on student loans up to a maximum amount of $2,500. This deduction was phased in over four years.
- Taxpayers may take the deduction during the first 60 months of the loan's repayment period.
- Borrowers who have Adjusted Gross Incomes between $50,000-$65,000 ($100,000-$130,000 for joint filers) phase out the amount of deduction.