Are Non-Accredited Schools Tax Deductible?

Attending an unaccredited university, college or technical school can leave you without many of the tax deductions enjoyed by students paying to attend an accredited postsecondary institution. This includes losing eligibility for tuition-related tax credits overseen by the IRS.

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Importance of Accreditation

Accreditation for a college, technical school or university independently certifies the strength of a school's curriculum and makes it eligible to grant degrees in particular fields. Departments within a school may earn accreditation, as can the university as a whole. Students attending unaccredited universities, colleges and technical schools are not eligible to receive federal student loans or money from federal need-based grants. The United States Department of Education does not directly accredit postsecondary schools but publishes a list of approved accrediting agencies at the regional and national levels. Universities and colleges often are accredited both nationally and regionally.

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Government Student Loan Programs

The federal government will only issue loans through the Federal Application for Student Aid, or FAFSA, if you're attending an accredited school. If you're not eligible for these guaranteed loans and government aid programs, you will lose out on a majority of tax deductions related to your education expenses, according to the IRS. This includes the ability to deduct the interest paid on student loans.

Federal Tax Programs

Attending a non-accredited school eliminates your eligibility for the American Opportunity Credit and the Lifetime Learning Credit, according to IRS Publication 970. These tax incentive programs directly reduce the money you owe the IRS based on the tuition, housing expenses, book costs and related fees you pay to attend a college, technical school or university. These are better than a tax deduction, which only reduces your total taxable income.

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Private Student Loans

Private student-loan companies may still approve loans to help you pay for the costs of attending a non-accredited school. Private lenders base loan eligibility on creditworthiness, which means you may pay a higher interest rate and face more restrictive terms for repayment than with federal student loans. You may deduct the interest you pay on these private loans from your federal taxes. This is only the case if the private loans you receive are student loans; simple private loans or lines of credit you use to pay education costs are not eligible.

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