§ 221. Interest on education loans
(a)
Allowance of deduction
In the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the interest paid by the taxpayer during the taxable year on any qualified education loan.
(b)
Maximum deduction
(1)
In general
Except as provided in paragraph (2), the deduction allowed by subsection (a) for the taxable year shall not exceed the amount determined in accordance with the following table:
In the case of taxable years
The dollar
beginning in:
amount is:
1998
$1,000
1999
$1,500
2000
$2,000
2001 or thereafter
$2,500.
(2)
Limitation based on modified adjusted gross income
(A)
In general
The amount which would (but for this paragraph) be allowable as a deduction under this section shall be reduced (but not below zero) by the amount determined under subparagraph (B).
(c)
Dependents not eligible for deduction
No deduction shall be allowed by this section to an individual for the taxable year if a deduction under section
151 with respect to such individual is allowed to another taxpayer for the taxable year beginning in the calendar year in which such individual’s taxable year begins.
(d)
Definitions
For purposes of this section—
(1)
Qualified education loan
The term “qualified education loan” means any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses—
(A)
which are incurred on behalf of the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer as of the time the indebtedness was incurred,
(B)
which are paid or incurred within a reasonable period of time before or after the indebtedness is incurred, and
(C)
which are attributable to education furnished during a period during which the recipient was an eligible student.
Such term includes indebtedness used to refinance indebtedness which qualifies as a qualified education loan. The term “qualified education loan” shall not include any indebtedness owed to a person who is related (within the meaning of section
267
(b) or
707
(b)(1)) to the taxpayer or to any person by reason of a loan under any qualified employer plan (as defined in section
72
(p)(4)) or under any contract referred to in section
72
(p)(5).
(2)
Qualified higher education expenses
The term “qualified higher education expenses” means the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) at an eligible educational institution, reduced by the sum of—
(A)
the amount excluded from gross income under section
127,
135,
529, or
530 by reason of such expenses, and
For purposes of the preceding sentence, the term “eligible educational institution” has the same meaning given such term by section
25A
(f)(2), except that such term shall also include an institution conducting an internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility which offers postgraduate training.
(4)
Dependent
The term “dependent” has the meaning given such term by section
152 (determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof).
(e)
Special rules
(1)
Denial of double benefit
No deduction shall be allowed under this section for any amount for which a deduction is allowable under any other provision of this chapter.
(f)
Inflation adjustments