Payment was made, though. The payment is what gave rise to the loan. I'm assuming this is a normal student loan, not an oddball situation where the taxpayer owes money to the educational institution.

If the client requests a statement of account from the school (which they should be anyhow, because the 1098-T is not always accurate), how much does it show the client paid? Is Box 1 of the 1098-T not clearly labeled "payments received"?