University of California, Riverside

Student Business Services



Frequently Asked Questions


Students and their families who believe that the Hope Tax Credit, Lifetime Learning Tax Credit, and/or Student Loan Interest Deduction provisions of the Taxpayer Relief Act of 1997 may apply to them should consult a professional tax advisor. The employees of the University of California, Riverside are not professional tax consultants. The information below is intended only to notify students and their families of selected provisions of the Taxpayer Relief Act of 1997. The circumstances of each potential beneficiary of the Taxpayer Relief Act of 1997 may vary. Please consult a tax professional for advice regarding the effects that this legislation may have upon your tax liability.

Hope and Lifetime Learning Tax Credits

Q1: Who is eligible for the tax credit?

A1: The student or the taxpayer who claims the student as an exemption on his of her tax return. Married taxpayers must file jointly. The credit is based on payments made for tuition and certain related educational costs.

Q2: What are the eligibility requirements for the student?

A2: To be eligible for the Hope Tax Credit at UC Riverside, the student must be (1) enrolled at least half-time for a minimum of one semester that begins during the taxable year; (2) enrolled in one of the first two years of postsecondary education; and (3) free of any conviction for a Federal or State felony offense that consists of the possession or distribution of a controlled substance.

Q3: What are the first two years of postsecondary education?

A3: The IRS has not defined this yet. We will update this web site as soon as this information becomes available.

Q4: Who may claim the Lifetime Learning Tax Credit?

A4: An individual paying qualified tuition and related expenses at a postsecondary educational institution, provided the institution is an eligible educational institution. Unlike the Hope Tax Credit, students are not required to be enrolled at least half-time. Non-citizens generally are not eligible to claim the Lifetime Learning Tax Credit.

Q5: Is the Lifetime Learning Tax Credit available for a student taking only one course?

A5: Yes.

Q6: What if I only attend UC Extension or Summer Session?

A6: Riverside will be reporting information on students who attend Summer Session and University Extension.

Q7: What qualifies as tuition and related educational costs?

A7: The term "qualified tuition and related expenses" means the tuition and fees an individual is required to pay in order to be enrolled at or attend an eligible institution. At UC Riverside, this includes the registration fee, the educational fee, non-resident tuition, and graduate professional student fees. Amounts paid for any course or other educational expense involving sports, games, or hobbies are not eligible for the tax credit. Charges and fees associated with room, board, student activities, athletics, health insurance, books, equipment, transportation, and similar personal, living, or family expenses are not qualified tuition or related expenses. (The same definition of "qualified tuition and related expenses" applies for the Lifetime Learning Tax Credit.)

Q8: What are "out of pocket expenses?"

A8: The money that you or the person claiming you as a dependent pays towards your qualified tuition and expenses minus any grants or scholarships that you receive. For example, Pell grants, Cal grants, SEOG, institutional waivers and scholarships may reduce expenses you may claim for the tax credit.

Student Loan Interest Deduction

Q1: Are there any limits on what qualifies as a student loan?

A1: Yes. The loan must have been used to pay the costs of attendance at an eligible educational institution for a student enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution that is described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088) and, therefore, eligible to participate in the student aid programs administered by the Department of Education. This category includes virtually all accredited public, nonprofit, and proprietary postsecondary institutions. For purposes of the student loan interest deduction, eligible educational institutions also include institutions that conduct 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 that offers postgraduate training.

Q2: Is a student loan interest deduction available if the student loan is not federally guaranteed or otherwise subsidized?

A2: Yes. As long as the loan was used to pay the costs of attendance at an eligible educational institution and the other eligibility requirements are met, the deduction is available for the interest on the loan. The deduction does not depend on whether the loan is federally guaranteed or subsidized.

Q3: What costs are included in the costs of attendance?

A3: Costs of attendance include all items that are included in costs of attendance for purposes of calculating a student's financial need in accordance with the Higher Education Act. Thus, they include tuition, fees, room, board, books, equipment, and other necessary expenses, such as transportation. Costs of attendance include more items than are included in qualified tuition and related expenses for purposes the Hope Scholarship and Lifetime Learning Credits.

Q4: Is the deduction available for interest paid on loans used to pay for graduate school?

A4: Yes.

Q5: May a former student whose loans are already in repayment deduct the interest they pay on a student loan on or after January 1, 1998?

A5: Yes, but they may deduct only those payments made during the first 60 months that interest payments are required on a loan. If interest payments on a student loan were first required before January 1, 1998, the months in which those payments were required count against the 60-month time limit for that loan. The 60-month period may run out at different times for different loans.

Q6: May a parent claim the student loan interest deduction if the parent borrows to pay his/her child's costs of attending college?

A6: Yes. An individual may claim the student loan interest deduction if the individual borrows money to pay the costs of attending college for certain members of the individual's family or household (including his/her children) and incurs the debt in a year in which the individual supplies more than half of the student's support.

Q7: Does an individual have to itemize his/her income tax deductions to claim the student loan interest deduction?

A7: No. The student loan interest deduction is available regardless of whether an individual elects to take the standard deduction or to itemize deductions. Instructions accompanying the 1998 tax forms (for returns required to be filed in 1999) will explain how to compute and claim the deduction.

Q8: If a student is claimed as a dependent by his/her parent in a particular taxable year, may the student take the student loan interest deduction for student loan interest that he/she pays in that year?

A8: No. The student may not claim the student loan interest deduction in any taxable year in which he/she is claimed as a dependent on another taxpayer's return. However, if the student continues to pay interest on a student loan and meets the other eligibility requirements, the student may claim the student loan interest deduction for payments made in a later year when the student is no longer a dependent on his/her parent's Federal income tax return.

Q9: Are there any tax benefits available if the student repays his/her loan by performing community service rather than making cash payments?

A9: There may be. Loan forgiveness provided in return for community service is tax-free when it is part of certain lending programs run by the Federal, state, or local government, educational institutions, or charitable organizations. Students should consult a tax advisor to determine whether they qualify.

More Information 

General Campus Information

University of California, Riverside
900 University Ave.
Riverside, CA 92521
Tel: (951) 827-1012

Contact Information

Student Business Services
900 University Avenue

Tel: (951) 827-3204
Fax: (951) 827-3576
E-mail: sbsofc@ucr.edu

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