Can I deduct student loan interest if my parents paid the loans in 2025?

It depends on who is legally obligated on the loan. The student loan interest deduction (up to $2,500 per year) is available only to the person who is both legally obligated to pay the loan AND actually makes the payments (or is treated as making them).

Scenario 1: You are the borrower, parents make payments as a gift

If the loans are in YOUR name and your parents make payments on your behalf, the IRS treats this as if your parents gave you the money and you made the payment. You can deduct the interest (up to $2,500), assuming you meet the income requirements. This is the most favorable scenario.

Scenario 2: Parents are the borrowers (Parent PLUS loans)

If your parents took out Parent PLUS loans, THEY are the borrowers. Even if you give your parents money to make the payments, only your parents can claim the deduction — and only if they are not claimed as dependents by someone else.

Scenario 3: You were claimed as a dependent

If your parents claim you as a dependent on their tax return, neither you nor your parents can deduct student loan interest that you paid. The deduction is not available to anyone who can be claimed as a dependent.

Income limits for 2024:

• The deduction phases out for single filers with MAGI between $80,000 and $95,000
• For married filing jointly, it phases out between $165,000 and $195,000
• Above the upper limit, no deduction is available

This is an above-the-line deduction (adjustment to income), meaning you can claim it even if you take the standard deduction. Report it on Schedule 1 (Form 1040), Line 21. You should receive Form 1098-E from your loan servicer showing the interest paid during the year.