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Cash Management Department

  1. If tuition was paid by a government subsidized loan, can I still take the American Opportunity or Lifetime Learning Credit?

    If you pay higher education expenses with certain tax-free funds, such as a scholarship, you cannot claim a credit for those amounts. If you are required to pay the loan back that was used to pay the higher education expenses, then the expenditures would qualify. The credit is claimed in the year in which the expenses are paid, not in the year in which the loan is repaid.

    References:

    1. Publication 970, Tax Benefits for Higher Education.
    2. Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits).