College Tax Deductions - New Alternatives to Hope and Lifetime Tuition Credits:

The Tax Relief Act of 2001 created a new tax law - even though it is temporary (until 2005), whereby deductions for college tuition may be made in lieu of the Hope Scholarship or Lifetime Learning tax credits.
The new college tax deduction could help taxpayers with incomes too high to get much, if any, benefit from the Hope or Lifetime credits. In 2002 and 2003, taxpayers with adjusted gross incomes up to $65,000 ($130,000 on joint returns) were eligible for a maximum deduction of $3,000 per year.

In 2004 and 2005, taxpayers in this same income range are now entitled to a deduction of up to $4,000. Taxpayers with incomes up to $80,000 ($160,000 on joint returns) can deduct up to $2,000.
The deduction can be claimed regardless of whether you itemize your deductions. The taxpayer won't be eligible to claim the new deduction and a Hope Scholarship or Lifetime Learning credit in the same year with respect to the same student.