Can I deduct education expenses that were paid with student loans?

It doesn't matter how education expenses were paid; eligible expenses can be deducted whether they were paid out-of-pocket or through a student loan.

When paying expenses through a loan, deduct them in the tax year you paid the expenses, not the year you got the loan or paid it off.

Keep in mind that if someone claims the student as a dependent, that person (not the student) gets the education credit, regardless of who actually paid the expenses.