Posted Date:January 19, 2017
| Author: | John Brooks, Service Director, Operations, Federal Student Aid |
Subject: Loan Servicing Information - Reporting Student Loan Interest Payments for 2016
As tax time approaches, we want to share general information with the financial aid community about our reporting of student loan interest payments. If a borrower made federal student loan payments in 2016, the borrower may be eligible to deduct a portion of the interest paid on the borrower’s 2016 federal tax return. Student loan interest payments are reported to both the Internal Revenue Service (IRS) and the borrower on IRS Form 1098-E, Student Loan Interest Statement.
We provide information about reporting student loan interest for 2016 through three basic questions and answers.Under what circumstances do federal loan servicers report interest payments on IRS Form 1098-E?
As required by the IRS, federal loan servicers must report payments on IRS Form 1098-E if the interest received from the borrower in the tax year was $600 or more by January 31, 2017.
If a borrower paid less than $600 in interest to a federal loan servicer during the tax year, the borrower may contact his or her servicer for the exact amount of interest paid during the year and to request a 1098-E.
How many 2016 1098-Es should a borrower expect to receive?
Most borrowers who paid $600 or more in interest during 2016 will receive one 1098-E. Some borrowers will receive two or more 1098-Es. If a borrower has questions about 2016 1098-Es, direct the borrower to his or her current federal loan servicer for assistance.
What are the different scenarios that may apply to 2016 1098-E dissemination?
The two scenarios outlined below cover the vast majority of federal student loan borrowers.
| 1) | Borrower’s Current Servicer Was Only Servicer in 2016 – In this case, a borrower’s current federal loan servicer will provide the borrower with a copy of his or her 1098-E if the interest paid in 2016 was $600 or more. The servicer may send the borrower his or her 1098-E via U.S. mail or electronically. |
| 2) | Borrower Had Multiple Servicers in 2016 – In this case, each of a borrower’s federal loan servicers will provide the borrower with a copy of his or her 1098-E if the interest paid to the individual servicer in 2016 was $600 or more. If the interest paid to each individual servicer is less than $600, but totals $600 or more across servicers, the individual may request a 1098-E from his or her servicers. Each servicer may send the borrower his or her 1098-E via U.S. mail or electronically. |
Note: Borrowers with loans previously serviced by VSAC Federal Loans in 2016 will receive a 1098-E from Nelnet.
Contact Information
We appreciate the community’s support in directing borrowers to their current federal loan servicers for 2016 1098-E information.
A borrower can access the NSLDS Student Access website to identify his or her current federal loan servicer.
A school that assists a borrower in identifying his or her current federal loan servicer can access the servicer information through the NSLDS Professional Access website. Contact information for the appropriate servicer also can be found on the Loan Servicing Centers for Schools Contact Information page on the IFAP website.