What is meant by qualified tuition and fees?
Qualified tuition and related expenses are tuition and fees required for enrollment or attendance at an eligible educational institution. Only “out-of-pocket” expenses factor into calculating the credits. Tuition and related expenses paid with loans, earnings, gifts, inheritances, and personal savings qualify towards calculating the credit amount. However, qualified tuition and related expenses paid with a Pell Grant, other grants, tax-free scholarships, a tax-free distribution from an Education IRA, or tax-free employer-provided educational assistance are not taken into account in calculating the credit amount. Qualified expenses do not include books, room and board, student activities, athletics (unless the course is part of the student’s degree program), insurance, or any other fee not directly related to tuition.
