Are Student Loans Taxable?

There are multiple types of student loans — each with their own unique terms. As noted earlier, though, student loans are not taxed as income.

Does Biden’s New $10K or $20K Student Loan Cancellation Counts as Income?

In August 2022, President Biden announced that student loan borrowers could qualify for up to $20,000 in student loan forgiveness. The loan amounts forgiven under this plan will not be considered taxable income for federal income tax purposes. However, in some states, student loan borrowers may be required to pay state income tax on loan amounts forgiven under this program.

Are Scholarships Taxable?

The high-level answer to this question is: it depends. There are many different forms of scholarships, grants, and fellowships that are awarded to students to cover the costs of studying and research. Some are need-based and some are merit-based. The basic difference between scholarships and loans is that a scholarship is given while a loan is borrowed. You won’t typically have to pay back a scholarship, but you do have to pay back a loan.

Does Financial Aid Come with Any Tax Benefits?

Student loans aren’t usually taxable as income, and in fact may come with a tax benefit that is meant to make repayment a little easier on borrowers investing in their education. The Student Loan Interest Deduction allows you to deduct the amount of interest you have paid on your student loans up to a maximum of $2,500 per year, if your modified adjusted gross income is less than $85,000 (or $170,000 for joint filers.)

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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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