The IRS Tax Code provides a few generous "tax incentives for families who are saving for, or already paying, higher education costs or are repaying student loans."

Taxpayers may be able to claim either a Hope or a Lifetime Learning Credit for the qualified tuition and related expenses of the students in taxpayers family, that may include the taxpayer, his spouse or an eligible dependent) who are enrolled in eligible educational institutions.

If a taxpayer claims the Hope Scholarship Credit for a particular student, then none of that student's expenses for that year may be applied toward the Lifetime Learning Credit.

Alternatively, taxpayers may be able to claim a tuition deduction of up to $4,000 of qualified education expenses paid during the year for the taxpayer, his spouse, or a qualified dependent.

The IRS does not allow the taxpayers to claim for this deduction if the taxpayers filing status is married filing separately or if another person can claim an exemption for the taxpayer as a dependent on his or her tax return. The qualified expenses must be for higher education.

Additionally, the taxpayer may be able to deduct interest paid on a qualified student loan. The deduction is claimed as an adjustment to income so the taxpayer would not need to itemize your deductions on Schedule A Form 1040.

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