Updated October 17, 2026. Quick answer: Box 1 of Form 1098-E shows the interest the lender received on your student loans during the year. Box 2 is a checkbox that matters only for loans made before September 1, 2004. Both concern the borrower, and the deduction itself is figured with the worksheet for Schedule 1 and reported on Schedule 1, line 21, as Publication 970 explains.
Related reading on this site: IRS Publication 970.
IRS worksheets from the 2025 Form 1040 instructions, read line by line: Student Loan Interest Deduction Worksheet.
Schedule 1 (Form 1040) for 2025, read line by line: Schedule 1 lines 21 to 23.
What the statement is and who gets one
The borrower’s instructions on the form open with who must send the statement: “A person (including a financial institution, a governmental unit, and an educational institution) that receives interest payments of $600 or more during the year on one or more qualified student loans must furnish this statement to you.”
The filer instructions add that the threshold is per borrower, not per loan: “The $600 threshold applies to each borrower regardless of the number of student loans obtained by that borrower.” “However, you may file a separate Form 1098-E for each student loan of the borrower, or you may file one Form 1098-E for the interest from all student loans of the borrower.” The tuition side of the same family of forms is in the Form 1098-T and 1098-E boxes guide.
What box 1 reports
The borrower’s copy says: “Shows the interest received by the lender during the year on one or more student loans made to you.”
The filer instructions state the same box from the lender’s side: “Enter the interest you received on a student loan(s) during the calendar year.” For newer loans, the amount includes more than plain interest: “For loans made on or after September 1, 2004, box 1 must include loan origination fees and capitalized interest received in 2025.” “Under that regulation, interest includes capitalized interest and loan origination fees that represent charges for the use or forbearance of money.”
Box 1 is the amount the lender received, which is not automatically the amount you may deduct. The next section covers that gap.
Box 1 is not the deduction
The borrower’s instructions are blunt: “You may be able to deduct student loan interest that you actually paid in 2025 on your income tax return.” “However, you may not be able to deduct the full amount of interest reported on this statement.”
Publication 970 explains one reason the numbers can differ: “The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer.” Another is who made the payment: “If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest.” The page on the student loan interest deduction covers the deduction itself.
What box 2 means
Box 2 is a checkbox, not a dollar amount. The borrower’s copy says: “If checked, indicates that loan origination fees and/or capitalized interest are not included in box 1 for loans made before September 1, 2004.” “See Pub. 970 for how to figure any deductible loan origination fees or capitalized interest.”
The filer instructions describe when the school or lender checks it: “Check this box if loan origination fees and/or capitalized interest are not reported in box 1 for loans made before September 1, 2004.”
Publication 970 explains the same older-loan rule: “For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest.” “However, if you pay qualifying interest that isn’t included on Form 1098-E, you can also deduct those amounts.”
What if no form arrives
A missing form does not by itself mean there is no deduction. Publication 970 works through a case with this fact pattern: “You didn’t receive a Form 1098-E for 2025 from the lender because the amount of interest you paid didn’t require the lender to issue an information return.” The publication then uses the lender’s account statement to figure the interest paid.
Where the amount goes on the return
The publication places the deduction in a specific spot. “The student loan interest deduction is claimed as an adjustment to income.” “To claim the deduction, enter the allowable amount on Schedule 1 (Form 1040), line 21.” The amount comes from a worksheet: “Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Schedule 1 (Form 1040) instructions included in the Instructions for Form 1040.” The borrower’s copy points to the same worksheet: “Instead, for more information, see Pub. 970, and the Student Loan Interest Deduction Worksheet in the Instructions for Form 1040.”
The publication states the overview: “This deduction can reduce the amount of your income subject to tax by up to $2,500.” It also ties the deduction to income: “However, if your MAGI is less than $100,000 ($200,000 if filing a joint return), you may be allowed a special deduction for paying interest on a student loan (also known as an education loan) used for higher education.” The deduction page and the Form 1040 page cover how it works across a return.
The caution printed on the form
The copy for the borrower carries a warning: “If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for student loan interest.” The practical lesson is to figure the deduction from the worksheet, not by copying box 1.
Edition and box numbers
The primary read for this page is the 2025 edition of Form 1098-E with its instructions for the borrower, the 2025 Instructions for Forms 1098-E and 1098-T, and Publication 970 for 2025 returns. The 2026 edition was the one irs.gov served as current on 2026-10-17. The only difference in the boxes themselves is the year: the 2026 borrower copy reads “For loans made on or after September 1, 2004, box 1 must include loan origination fees and capitalized interest received in 2026.” The box 1 and box 2 filer instructions read the same in both editions. Check the tax year printed on the form you received before relying on any box description here, because the instructions are reprinted every year.
Common mistakes
- Entering box 1 as the deduction. The borrower’s copy says “you may not be able to deduct the full amount of interest reported on this statement”.
- Skipping the worksheet. The publication says to “enter the allowable amount on Schedule 1 (Form 1040), line 21” after using it.
- Ignoring box 2 on an older loan. The publication says that for loans before September 1, 2004 “if you pay qualifying interest that isn’t included on Form 1098-E, you can also deduct those amounts”.
Related: the student loan interest deduction, Form 1098-T, Form 1040, and Form 1098.
Sources
- Form 1098-E (2025) with Instructions for Borrower: IRS archived PDF (irs.gov)
- Form 1098-E (2026) with Instructions for Borrower: https://www.irs.gov/pub/irs-pdf/f1098e.pdf
- Instructions for Forms 1098-E and 1098-T (2025): IRS archived PDF (irs.gov)
- Publication 970, Tax Benefits for Education (for 2025 returns): https://www.irs.gov/pub/irs-pdf/p970.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.