Here are the tax credits and deductions college students should take advantage of

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With the cost of college continuing to rise, many students struggle to pay their tuition bills and loans.

Fortunately, there are several deductions and credits available to college students that can help pay for educational expenses while offering income tax relief.

Here's a review of some of the student tax breaks you may be eligible for.

The American Opportunity Tax Credit

The American Opportunity Tax Credit is one of the most rewarding tax breaks available to students and their families. To qualify, you must be pursuing a degree yourself or have a child doing so at an accredited university.

Furthermore, you or your child needs to be enrolled at least half-time, and the credit applies to the first four years of higher education only. If you meet these criteria, you may be eligible for a credit equal to 100% of the first $2,000 you spend on qualified education expenses per student, plus 25% of the next $2,000.

Better yet, 40% of the American Opportunity Tax Credit is refundable, which means that if your tax liability falls below zero, you'll get a check from the Internal Revenue Service for the difference.

However, there is a catch: If you earn too much money, you won't be eligible. If you're a single tax filer, you'll need to have a modified adjusted gross income (MAGI) of $80,000 or less to receive the credit in full.

If your MAGI is between $80,000 and $90,000, you'll get a partial credit, but once your income exceeds $90,000, you won't get the credit at all.

If you're married and file a joint tax return, you can get the credit in full if your MAGI is $160,000 or less, and you can get a partial credit if your MAGI is between $160,000 and $180,000. But if you earn more than $180,000, you'll have to kiss that credit goodbye.

The Lifetime Learning Credit

The Lifetime Learning Credit can put a fair chunk of change back in your pocket to the tune of 20% of your first $10,000 in qualified tuition expenses, or up to $2,000 per tax return. Like the American Opportunity Tax Credit, the Lifetime Learning Credit starts to phase out at certain income thresholds.

If you're a single tax filer, the credit begins to phase out at $55,000, and if you earn more than $65,000, you won't be eligible. If you're a couple filing taxes jointly, the credit starts to phase out at $110,000 and is not available to those earning more than $130,000.

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Tax deductions for tuition and fees

If you don't qualify for the American Opportunity Tax Credit or the Lifetime Learning Credit, you may still get a tax break by deducting up to $4,000 in applicable tuition and fees. You can take the tuition and fees deduction in full if your MAGI is less than $80,000 as a single tax filer, or $160,000 as a couple filing jointly. Best of all, you can claim this deduction even if you don't itemize on your taxes. To qualify, your filing status needs to be something other than married filing separately. Furthermore, you can't take the deduction if someone else can claim you as a dependent.

Student loan interest deduction

An estimated 43 million Americans owe nearly $1.3 trillion in student loans. If you're among the many college graduates saddled with debt, there's a silver lining: You may be eligible to deduct up to $2,500 in student loan interest from your taxable income. And, as is the case with the tuition and fees deduction, you don't need to itemize to take advantage of this particular tax break.

To qualify for the student loan interest deduction, your filing status cannot be married filing separately. Furthermore, you can't have someone else claim you as a dependent on his or her tax return. Finally, you won't be able to take a deduction if you make too much money. The deduction starts to phase out for single tax filers earning more than $65,000 and joint filers earning more than $130,000. And if you earn more than $80,000 as a single tax filer or $160,000 as a couple filing jointly, you won't be eligible at all.

The bad news for students today is that the cost of college is climbing rapidly enough to outpace inflation. The good news, however, is that there are several tax breaks designed to ease the financial burden for students and their families. If you're a student, or if you're paying for a spouse or child to pursue a degree, it pays to explore the tax benefits that may be available to you. You have very little to lose and a whole lot of money to potentially gain.