Publication 970 - Tax Benefits for Education - Student Loan Repayment Assistance

Publication 970

Student loan repayments made to you are tax free if you received them for any of the following:

The National Health Service Corps (NHSC) Loan Repayment Program (NHSC Loan Repayment Program).
A state education loan repayment program eligible for funds under the Public Health Service Act.
Any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in under served or health professional shortage areas.

You cannot deduct the interest you paid on a student loan to the extent payments were made through your participation in the above programs.

Student Loan Repayment Assistance(p36)