Is taking a private loan for school taxable income, how does it affect your taxes?

Forum|Forum|2 years ago
September 25, 2023
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I need to take out 95,000 for the first scholastic year and will only pay the first trimester this year and the rest 2 trimesters the next year. I was wondering if the larger amount still left is taxed at the end of the year? Is there way I can commit it to tuition and make it non-taxable

Also I need extra for renting an apartment and food, is that extra taxed?

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Best answer by Hal_Al

Q. Is taking a private loan for school taxable income?

A. No

Q. Also I need extra for renting an apartment and food, is that extra taxed?

A. No

Money from loans is not income, because the money has to be paid back. If, sometime in the future, the money is not paid back, then there might be tax consequences depending on the details. If this "private" loan is from family, probably not (family [and sometimes even non family] gifts for education are usually not subject to gift tax)

It, generally, doesn't matter what the money is used for. Qualified educational expenses (QEE) (tuition, fees and course materials) paid for by loaned money can be used to claim an education credit. Non qualified expenses (room & board, on or off campus) cannot be used to claim a credit.