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governmental unit or a tax-exempt section 501(c)(3) organization. Educational organization described in section 170(b) (1)(A)(ii). This is an educational institution that maintains a regular faculty and curriculum and normally has a regu- larly enrolled body of students in attendance at the place where it carries on its educational activities. Section 501(c)(3) organization. This is any corpora- tion, community chest, fund, or foundation organized and operated exclusively for one or more of the following pur- poses. • Charitable. • Religious. • Educational. • Scientific. • Literary. • Testing for public safety. • Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment). • The prevention of cruelty to children or animals. The cancellation of your loan won't qualify for tax-free treatment if it is canceled because of services you performed for the educational organ- ization that made the loan or other organization that provi- ded the funds. Refinanced Loan If you refinanced a student loan with another loan from an educational organization or a tax-exempt organization, the cancellation of that loan may also be treated as discussed above. This applies if the new loan is made under a pro- gram of the refinancing organization that is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs where the services required of the students are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) or- ganization (defined earlier). Student Loan Repayment Assistance Student loan repayments made to you are tax free if you received them for any of the following. • The National Health Service Corps 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 CAUTION ! availability of health services in underserved or health professional shortage areas (as determined by such state). You can't deduct the interest you paid on a stu- dent loan to the extent payments were made through your participation in the above programs. 6. Coverdell Education Savings Account (ESA) Introduction If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you may be able to establish a Coverdell ESA to finance the quali- fied education expenses of a designated beneficiary. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. Total contributions for the beneficiary in any year can't be more than $2,000, no matter how many separate Cov- erdell ESAs have been established for the beneficiary. See Contributions, later. This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. What is the tax benefit of the Coverdell ESA? Contri- butions to a Coverdell ESA aren't deductible, but amounts deposited in the account grow tax free until distributed. If, for a year, distributions from an account aren't more than a designated beneficiary's qualified education expen- ses at an eligible educational institution, the beneficiary won't owe tax on the distributions. See Tax-Free Distribu- tions, later. Table 6-1 summarizes the main features of the Cover- dell ESA. CAUTION ! TIP Chapter 6 Coverdell Education Savings Account (ESA) Page 39