Tax Benefits

In August 1997, the U.S. Congress passed the Taxpayer Relief Act of 1997 (TRA '97) This act creates several new Federal income tax benefits for families who are saving for higher education, already paying higher education costs, or are repaying loans. Specifically, TRA '97 provides for a student loan interest deduction, a Hope Scholarship credit and a Lifetime Learning credit.

Student Loan Interest Deduction:

This deduction may be claimed for interest payments on qualified federal and private education loans if:
▪ the loan is used for post-secondary expenses, such as
tuition, fees, books, equipment, room and board, and
other necessary expenses, such as transportation; and
▪ the loan is in the first 60 months that interest payments
are required.

Characteristics include:

▪ a maximum deduction of $1,000 in 1998, $1,500 in 1999,
$2,000 in 2000 and $2,500 in 2001
▪ limited deduction starting at modified adjusted gross
income (AGI) of $40,000 ($60,000 for married taxpayers
filing jointly, if married, taxpayer must file a joint return)
▪ no deduction to taxpayers with AGI over $55,000 ($75,000
if filing jointly)
▪ deduction is available for interest payments due and made
after December 31, 1997; and
▪ no requirement to itemize deductions on Schedule A (Form
1040).

Reporting Information:

By February 1, Roanoke College's third party vendor, EFG Technologies, will be reporting interest paid by you on IRS Form 1098-E for your Federal Perkins Loan or Roanoke College Loan. For questions regarding the interest paid on these loans, please contact EFG at 1-800-334-8609. For information regarding interest on any other education loan, please contact the lender.

Hope Scholarship Credit

This credit may be claimed for qualified tuition paid on behalf of EACH student in the taxpayer's family who was:

▪ enrolled at least half-time in an eligible institution
▪ enrolled in the first two years of post-secondary education;
and
▪ enrolled in a program leading to a degree or other
recognized credential.

Characteristics include:

▪ a maximum credit per student of $1,500 in 1998 (100
percent of the first $1,000 of qualified tuition, plus 50
percent of the next $1,000)
▪ gradual credit reduction starting at modified adjusted gross
income of $40,000 ($80,000 for married taxpayers filing
jointly, if married, taxpayer must file a joint return); and
▪ credit available for qualified payments made after
December 31, 1997 for academic periods starting after this
date.

Lifetime Learning Credit

This credit may be claimed for the qualified tuition paid by a taxpayer's family who was:

▪ enrolled in undergraduate, graduate, or professional
degree courses
▪ enrolled in any course of instruction to acquire or improve
job skills; and
▪ receiving instruction from an eligible institution.

Characteristics include:

▪ a maximum credit per family of $1,000 in 1998 (20
percent of first $5,000 of qualified tuition expenses)
▪ gradual credit reduction at modified adjusted gross income
of $40,000 ($80,000 for married taxpayers filing jointly, if
married, taxpayer must file a joint return); and
▪ credit available for qualified payments made after June 30,
1998 for academic periods starting after this date.

IRS Required Reporting

Starting in 1998, all eligible educational institutions or their third party vendors are required to submit Form 1098-E (Student Loan Interest Statement) and/or Form 1098-T (Tuition Payment Statement) to the IRS and to the student at the end of each tax year.

Form 1098-E will indicate the amount of student loan interest paid during the tax year.

Form 1098-T will indicate whether the student was enrolled at least half-time for at least one academic period during the tax year.

The information filed with the IRS must contain the student's Social Security Number (SSN). The SSN and the primary address on Roanoke College's database will be used for reporting purposes. Incorrect information must be corrected at the Office of the Registrar.

Enclosed is a separate financial data sheet which is meant to assist you with your tax return preparation but should not be considered tax advice. The data will include qualified tuition, scholarships and cash/loan payments received for the calendar year.

Roanoke College will print and mail the1098-T statements by March 1st. If you do not receive your 1098-T by this time, please contact the Roanoke College Business Office at 540 375-2254.

This information is not intended as legal or tax advice. Individuals should obtain IRS Publication 970, Tax Benefits for Higher Education, or contact a tax practitioner about personal income tax situations.

For information about the deduction for Student Interest and Hope and Lifetime Learning Credits, contact your tax advisor or IRS at 1-800-829-1040.