The deduction is allowed only for the first 60 months of interest payments. Months during which the loan is in deferral or forbearance do not count against the 60-month period. The deduction is effective on interest payments due and paid after December 31, 1997. In the case of existing loans, interest payments qualify for deduction to the extent that the 60-month period has not expired. College officials say the new incentives could also help boost enrollments among both younger and returning students.
HOPE does come with a few strings attached.
In addition, students who have been convicted of a felony for the possession or distribution of a controlled substance are ineligible. And students who receive other forms of financial aid such as a Pell Grant will have the amount of their eligibility for HOPE reduced by the amount of aid they receive. In addition to the HOPE tax credit, a number of other Tax Relief Act features make college the best buy it has been in years. Tax credit beyond the first two years College juniors, seniors, graduate students, adults returning to college and students attending less than half time are eligible for a new lifetime learning credit. The credit is available for expenses paid after June 30, 1998.