Is a Student Loan Considered Income?

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Chris Snellgrove

By Chris Snellgrove

May 14, 2020

In most cases, student loans are not considered income. 

You have to file your taxes every year, and providing information such as your income seems straightforward. For college students receiving financial aid or borrowing student loans, this can be a confusing time. You may find yourself asking, “Are my student loans considered income?”

Student loans do not count as income 

The short answer to the question of whether your student loan is considered income is “no.” In the eyes of the IRS, these loans do not count towards your annual income.

And the reason why is pretty straightforward: unlike actual income, your loans must be paid back (plus interest). And the only thing you normally have to worry about with loans and the IRS is making sure you deduct the amount you have paid that year in interest once you start paying loans off.

Generally speaking, it’s the same with any scholarships or grant money that goes directly towards tuition and books. But extra funds that help you pay for things like room and board would be counted as income for tax purposes.

Student loans not counting towards income typically works in your favor. 

However, if you apply for credit card, your income may positively impact your odds or approval and how much you qualify for. But you can not count student loans as your income on this application.  

The Exceptions To This Rule

There is really only one time you need to be worried about student loans counting as income, and that’s if you have your loans forgiven. Generally, if you have more than $600 forgiven, you’ll need to report the forgiven amount as income.

Certain loan forgiveness programs are exempt from this. This includes Teacher Loan Forgiveness and Public Service Loan Forgiveness programs. Closed school, death and disability, and false certification discharges are also all exempt. But if you are on an income-driven repayment plan, and have a remaining balance that is forgiven, the remaining balance is taxed as income. 

A good place to start:

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