What Are Qualified Education Expenses?

Qualified education expenses are education-related expenses for which a student or the parent of a dependent student can claim a higher education tax benefit. As grad students have educational expenses associated with their role as students (even if the expenses are paid on their behalf), they can always reduce their tax burden using their qualified education expenses.

This article was most recently updated on 3/19/2024. It does not constitute tax, legal, or financial advice.

The precise definition of what does and does not constitute a qualified education expense varies based on the type of educational tax benefit being claimed. Publication 970 (p. 4) explains:

Even though the same term, such as qualified education expenses, is used to label a basic component of many of the education benefits, the same expenses aren’t necessarily allowed for each benefit.

Please note that each of the following higher education tax breaks have eligibility criteria not listed in this article.

Tax-Free Scholarships and Fellowships

The qualified education expenses that balance against scholarships and fellowships paid to students to make the scholarships and fellowships tax-free are defined on p. 6 of Publication 970:

Qualified education expenses. For purposes of tax-free scholarships and fellowship grants, these are expenses for:

• Tuition and fees required to enroll at or attend an eligible educational institution; and
• Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.

Expenses that don’t qualify. Qualified education expenses don’t include the cost of:

• Room and board,
• Travel,
• Research,
• Clerical help, or
• Equipment and other expenses that aren’t required for enrollment in or attendance at an eligible educational institution.

Lifetime Learning Credit

The qualified education expenses that qualify for the Lifetime Learning Credit are defined on p. 24 and 28 of Publication 970:

For purposes of the lifetime learning credit, qualified education expenses are tuition and certain related expenses required for enrollment in a course at an eligible educational institution. The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills.

Qualified education expenses don’t include amounts paid for:

• Insurance;
• Medical expenses (including student health fees);
• Room and board;
• Transportation; or
• Similar personal, living, or family expenses.

This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.

American Opportunity Tax Credit

The qualified education expenses that qualify for the American Opportunity Tax Credit are defined on p. 13, 14, and 17 of Publication 970:

For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.

Related expenses. Student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution.

Qualified education expenses don’t include amounts paid for:

• Insurance;
• Medical expenses (including student health fees);
• Room and board;
• Transportation; or
• Similar personal, living, or family expenses.

This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.