I entered my 1098-E and it stated that I would be receiving back all of the interest paid. However, my tax return did not increase by the full amount shown on my 1098-E?

[AnnetteB · Accepted solution]

Student loan interest is a deduction that reduces your taxable income.  Therefore, you will not see your refund increase by the amount shown on your Form 1098-E.

This means that with a lower taxable income you will pay less taxes.  Student loan interest does not affect your refund dollar-for-dollar as it would if it were a credit instead of a deduction.  If it were treated as a credit, then your total tax would be reduced by the total amount of the interest and your refund would be increased by the same amount. 

To learn more about student loan interest, click here.