An Education in Student Savings – 10 Common Tax Deductions and Savings for Students

There never seems to be enough money, especially if you are a college student strapped for funds. It’s no wonder, with the high cost of tuition, books, housing, and dwindling funds available from scholarships, grants, and loans. But don’t despair – here are ten ways that college students can make ends meet (and even have some fun doing it).

Let’s start with tax deductions and benefits:

1. Education tax credits. If you pay for college or trade school costs, you may be able to claim the American Opportunity Tax Credit or the Lifetime Learning Credit for those expenses, as long as your income is under certain amounts. If your parents pay for college costs, they may be able to claim the education credit on their tax return as long as they claim you as a dependent.
2. Scholarships and fellowships. If you are lucky enough to receive a scholarship or are paid a stipend for a fellowship, it will be tax-free if you are a degree candidate. But wait – you must use the funds to pay for tuition, fees, books, supplies, and equipment. Use the money for anything else, and you will pay tax on it.
3. Student loan interest. Up to $2,500 of the interest you pay on student loans is tax deductible, even if you don’t itemize deductions, as long as your modified adjusted gross income (MAGI)  is under $90,000 if you are single and $185,000 if you are married filing jointly. To receive the maximum deduction of $2,500 in 2023, your MAGI must be under $75,000 for single filers ($155,000 for joint returns). 
4. Work-Related Education. If you are returning to school to maintain or improve your job skills, you may be able to claim the Lifetime Learning Credit of up to $2,000 per tax return. This credit does not have a limit on the number of years you can claim it. 

Now for some expense-busting tips:

5. Buy used textbooks or rent them if you can. Use online textbook comparison sites to shop for the best prices. When you are done with the course, sell your used textbooks online. Buying electronic versions of textbooks rather than old-fashioned paper versions is another way to save. If you only need the book for a semester, it may be worth renting the book when available for a fraction of the cost of buying the book new.  
6. Look for student discounts. If the retailer or service provider doesn’t advertise a student discount, ask. The worst they can do is say no, and you may be able to snag a discount that isn’t widely advertised.
7. Splurge on a good coffee maker – and use it. It’s expensive to buy lattes at your local coffee house. Tuck a thermos full of coffee into your backpack and use it to refill your to-go cup. 
8. Stock up on snack foods. Busy college students are pressed for time and need to eat on the go a lot, but crackers, string cheese, cookies, and sweet rolls from home are much cheaper than buying them in coffee shops, and they are just as portable.
9. Buy used if possible. Shop for refurbished computers and other electronics online, and you’ll get much more for your money. It may be last month’s model, but it will still be functional. Remember, everything you own is used once you buy it, so why not start there and save some bucks?
10. Free entertainment is, well, free. Watch television online, gather with friends at free movie screenings on campus, join in a game of touch football or tennis, or go for a swim at the Y. Get creative, get moving, and get involved. There are lots of ways to entertain yourself and your date on the cheap.