The Student Loan Debt Relief Tax Credit
2023 Tax Year Application Process is Closed
Who may apply: Maryland taxpayers who maintain Maryland residency for the 2023 tax year.
How to apply: Complete the Student Loan Debt Relief Tax Credit Application.
The application will open again on July 1, 2024 and remain open through September 15, 2024.
Eligible applicants: Maryland taxpayers who have incurred at least $20,000 in undergraduate and/or graduate student loan debt, and have at least $5,000 in outstanding student loan debt at the time of applying for the tax credit.
How does MHEC decide who receives the Tax Credit?
The criteria for selecting who receives the tax credit are set out in the Code of Maryland Regulations (COMAR). Please note that these regulations are currently in the process of being updated to align with recent changes in the law; the most up-to-date information on the program is on this webpage.
For any taxable year, the total amount of credits approved by MHEC may not exceed $18,000,000. Maryland Higher Education Commission (MHEC) shall prioritize tax credit recipients and dollar amounts based on qualified taxpayers in the following order:
(1) MHEC shall reserve $9,000,000 of the tax credits for the following individuals in the following order of priority:
(a) State employees who graduated from institutions of higher education in the state where at least 40% of the attendees are eligible to receive federal Pell Grants; and
(b) State employees who graduated from institutions of higher education where less than 40% of the attendees are eligible to receive federal Pell Grants;
If the total amount of tax credits applied for by individuals described in (a) and (b) above is less than $9,000,000 for a taxable year, MHEC may make available the unused amount of credits for use by other qualified taxpayers.
(2) Subject to the above, MHEC shall prioritize tax credit recipients and amounts in the following order of priority:
(a) Qualified taxpayers who graduated from institutions of higher education in the State where at least 40% of the attendees are eligible to receive federal Pell grants; and
(b) Qualified taxpayers who graduated from institutions where less than 40% of the attendees are eligible to receive federal Pell Grants, who may be prioritized by one or more of the following categories:
• Did not receive a tax credit in a prior year
• Graduated from an institution of higher education located in the state
• Were eligible for in–state tuition
• Have higher debt burden to income ratios
Frequently Asked Questions
NEW Podcast: How to successfully fill out your Student Loan Debt Relief Tax Credit Application
Don't get disqualified due to incorrect lender documents. See examples of acceptable and unacceptable lender documents
Proof of Payment to Lender:
Recipients of the Student Loan Debt Relief Tax Credit must, within three years from the close of the taxable year for which the credit applies, pay the amount awarded toward their college loan debt and provide proof of payment to MHEC. Payments to lenders may consist of principal and/or interest and may be paid in a lump sum and/or installments.
Those who do not provide this proof will be required to return the money to the state through a process known as "recapture." Recapture is performed by the State Comptroller's Office. For questions about how recapture works, please contact the Comptroller's Office. The Comptroller's Ombudsman can assist you in understanding your rights and responsibilities under the Maryland Tax Statute.
Contact Information for Comptroller's Ombudsman
Name: Dana Frank Buker
Telephone number: 410-260-4020
Address: 80 Calvert Street, PO Box 466, Annapolis, MD 21404-0466
Please note: The college loan relief laws in effect have no impact on the Student Loan Debt Relief Tax Credit program. Regardless of whether individuals are provided with loan relief, the Student Loan Debt Relief Tax Credit program still requires that, if taxpayers claim the credit on their tax returns, they must pay the tax credit award amount toward their loan balances within three years or be subject to recapture of the tax credit by the State. Any loan deferment, forbearance, or forgiveness programs will not change this requirement.
To show proof of your college loan payments, log onto your OneStop account and attach your documents there.
|TAX CREDIT AWARD YEAR
|PROOF OF PAYMENT DUE DATE
Having problems with your student loan servicer?
If you have a complaint about your student loan servicer and need information on what steps you can take to resolve your concerns, you can contact the Maryland Student Loan Ombudsman at https://www.dllr.state.md.us/finance/consumers/frslombud.shtml .
Maryland Student Loan Ombudsman can assist with the following:
- Failure by the servicer to communicate with a borrower
- Errors in crediting principal and interest payments
- Misapplied payments
- Inaccurate interest rate calculations
- Billing errors
- Loan consolidations or modifications errors and/or
- Inappropriate collection activity or tactics.