Student Loan Interest Deduction
(SLID)
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Related Resources
AAMC Documents
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Current Status
Current Internal Revenue Code (26 USC Sec. 221) allows for borrowers
to deduct up to $2,500 of interest paid on qualified student loans.
The maximum allowable deduction starts to phase out at gross incomes
greater than $50,000 ($100,000 for joint return), and a deduction
is not allowed for borrowers with gross income greater than $65,000
($130,000 for joint return). Furthermore, dependents are not eligible
for the student loan interest deduction, and other assistance, such
as employer contributions and scholarships, must be reduced from
the total costs incurred. The sunset provision for this amendment
indicates that deductions cannot be applied to taxable years after
December 31, 2010.
Congressional Activity
In the 109th Congress, the House of Representatives and the Senate
introduced a number of bills that propose changes to the current
Internal Revenue Code. Several House bills propose to eliminate
the limit on the maximum allowable deduction, while a number of
the Senate bills propose a $1,500 credit to replace the current
deduction. Additionally, a number of bills have proposed reinstating
a 60-month limit, which would prohibit the deduction of interest
on loans taken out 60 months prior to filling. Bills in both the
House and the Senate have phase outs between varying gross incomes.
A side by side chart of pending legislation is available under AAMC
Documents.
AAMC Activity
The AAMC has endorsed Rep. Phil English's (R-Pa.) "Higher
Education Affordability and Equity Act of 2007" ( H.R. 1407).
This Bill proposes that the limitations on the maximum allowable
deduction be repealed, and increases the income levels that trigger
the eligibility phase out to between $100,000-$115,000 ($200,000-$230,000
for joint returns). Furthermore, the H.R. 1407 excludes amounts
received as part of a scholarship, fellowship or grant from taxable
income if used for qualified higher education expenses for undergraduate
and graduate students.
Contacts
Matthew Shick, Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 828-0525
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