Correction
Carl and I discussed this in a back channel. You can claim the student loan interest deduction even though you are in default on the loan. Being in default does not prevent it from being a "qualified student loan." You can still deduct any interest that you actually paid, even if it was paid with money taken from your tax refund or a garnishment of other income.
What Carl was thinking of is that you cannot deduct interest that was added to the balance of the loan. When you miss loan payments, there is interest that you didn't pay. The lender might add that unpaid interest to the balance of the loan. It's called capitalized interest. You can't deduct that capitalized interest because you didn't pay it.
