How Does Going to College Affect Taxes?

College students and their families may qualify for the American Opportunity Credit (up to $2,500) or the Lifetime Learning Credit (up to $2,000). If you use money from a 529 plan for qualified education expenses, it's tax-free. Scholarship money used for tuition is generally not taxable, but amounts used for room and board are. Student loan interest of up to $2,500 is deductible. Only one person (student or parent) can claim education credits for the same student in the same year.