Students with financial aid may be able to take the Student Loan Interest Deduction, which lets you deduct the interest paid on student loans. The deduction is capped at $2,500 or the actual amount of interest you paid, whichever is smaller. This deduction does not require you to itemize your deductions. Though not specific to financial aid, students might also consider the American Opportunity Tax Credit, the Lifetime Learning Credit, and the Tuition and Fees Deduction, which all allow tax breaks for educational expenses.