What can I file with my taxes if I have defaulted student loans

Generally when one defaults on a student loan, that loan is sold to a collection agency. The original grantor of the loan usually sells the loan for less than the balance due on the loan. Once the loan has been sold by the grantor, the qualified student loan is considered to be paid off. With the outstanding unpaid balance written off by the grantor. When that occurs the grantor can issue a 1098-C to the borrower as a forgiveness of debt on the unpaid balance of the loan. That unpaid balance is then fully taxable income to the borrower.

For the collection agency that purchased the loan, it is no longer a qualified student loan to the borrower. Nothing paid on this loan is deductible. So the borrower will not be receiving a 1098-E or any other type of tax reporting document, and can not deduct interest or any collection fees imposed by the collector and paid by the borrower.