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Major tax reform doesn't occur often, and as one of the most sweeping changes to our tax code in decades, the Tax Cuts and Jobs Act (TCJA) of 2017 impacts just about every taxpayer in the country. Parents of college students may be particularly interested in how the bill will affect them.

Here are a few provisions of the TCJA that will impact paying for higher education, student loans and taxes.

This is general overview of a few of the recent tax changes and not tax advice. You should speak with a tax professional to find out how the new law will affect your family.

Home Equity Interest Deduction Eliminated

The deduction for interest paid on a home equity loan or line of credit was eliminated by the new tax law, unless the loan proceeds are used to buy, build or substantially improve the home. Prior to the TCJA, parents could deduct interest paid on up to $100,000 of home equity debt, regardless of how the proceeds were used.

Many parents tap their home's equity to pay for college, pay off student loans or refinance student loans into a mortgage. With interest on these loans no longer providing tax benefits, parents may still choose a home equity loan to take advantage of potentially lower interest rates or do a cash-out refinance.

Student Loan Interest Deduction Stays

One tax break that wasn't impacted by the new tax law is the student loan interest deduction. Joshua Zimmelman, owner of Westwood Tax & Consulting in Rockville Centre, New York, says, "although there was discussion of eliminating the student loan interest deduction, luckily for college students and their parents, it was preserved in the final bill."

Taxpayers can claim a deduction of up to $2,500 per year for interest paid on qualified student loans. The value of this tax break is reduced as your income goes up, so single filers with a Modified Adjusted Gross Income (MAGI) above $80,000 ($165,000 for married couples filing jointly) cannot claim the deduction.

Student loan interest is an above-the-line deduction, meaning it appears on the first page of your Form 1040 and reduces your adjusted gross income (AGI). Above-the-line deductions are valuable because you don't have to itemize to take advantage of the tax benefits.

Another above-the-line deduction that survived is the tuition and fees deduction for qualified tuition and related expenses. The TCJA did not address this provision. It had expired in 2016, but the Bipartisan Budget Act of 2018 (BBA), passed on February 9, 2018, extended it for the 2017 tax year.

The maximum deduction is $4,000. It is reduced to $2000 for single filers with an MAGI of $65,000 to $80,000 ($130,000 to $160,000 for married couples filing jointly) and eliminated for single filers with an MAGI over $80,000 (over $160,000 for married couples filing jointly).

Tax-Free Cancellation of Student Loan Debt Extended

Taxable income usually includes any debts forgiven. For example, if you have a $5,000 debt forgiven, then the IRS treats this as income. One notable exception is federal student loan debt that qualified for the Public Service Loan Forgiveness Program.

The new tax law now also allows federal and private student loans discharged due to death or disability to be excluded from taxable income. This provision applies to discharges after December 31, 2017, and before January 1, 2026.

Higher Education Tax Credits Remain

The new tax law did not impact tax credits for higher education. Taxpayers can still claim the American Opportunity Tax Credit (AOTC), a credit of up to $2,500 per year for the first four years of college and the Lifetime Learning Credit (LLC), a credit worth up to $2,000 per year for qualified tuition and related expenses. Unlike a deduction, which reduces the taxpayer's taxable income, a tax credit is a dollar-for-dollar reduction in your tax bill.

The AOTC applies to qualified education expenses including tuition paid for the first four years of undergraduate education. This tax credit is partially refundable, meaning if the credit brings the amount of tax you owe to zero, part of the remaining credit can be refunded to you.

The AOTC is reduced for single filers with an MAGI greater than $80,000 and eliminated once it reaches more than $90,000 ($160,000 and $180,000 for married couples filing jointly

The House version of the bill proposed eliminating the LLC, but the final bill let it stay. Because the LLC is not limited to four years of undergraduate studies, it can be beneficial for fifth-year undergraduates, part-time students and graduate students.

For 2018, the LLC will phase out for single filers with an inflation-adjusted MAGI of $57,000 to $67,000 ($114,000 to $134,000 for married couples filing jointly).

529 Plan Savings Accounts Expanded

Taxpayers can continue to save for college using tax-advantaged 529 plans, but these accounts are not just for college anymore.

Before the TCJA, 529 plan withdrawals were tax-free as long as the funds were used for qualified higher education expenses including tuition, room and board and computer software and equipment at an eligible post-secondary institution.

Beginning in 2018, 529 plans can now be used for K-12 expenses. Taxpayers can use up to $10,000 each year for tuition at a public, private, or religious elementary or secondary school. That $10,000 limit applies per student.

Uniform Transfer to Minors Accounts Tax Increased

Some parents prefer to save for their child's education using a Uniform Transfer to Minors Account (UTMA). Unlike a 529 plan, the money in a UTMA isn't tax-free when it's used for education. However, there are no restrictions on their use so some parents prefer them for their flexibility.

But the TCJA may make UTMAs less popular, Zimmelman says.

Investment earnings from UTMAs through year 2025 will be taxed at rates up to 37 percent — applying the rate table used for trusts — instead of the parents' marginal tax rate, which could be higher or lower.

"Unless you're already in the highest tax bracket, you will likely see an increase in this tax," Zimmelman says.

As you can see from the changes outlined above, figuring out how the new tax law will impact you is no simple matter, especially if you are paying for college or repaying student loans. It's nearly impossible to view any one tax change in isolation, as some losses are offset by gains elsewhere. Speak with a tax professional to find out exactly what the new tax law means for paying for college, student loans and taxes.

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