The Student Loan Debt Relief Tax Credit
The Application Process is Closed for This Tax Year
Who may apply: Maryland taxpayers who maintain Maryland residency for the 2022 tax year.
How to apply: Complete the Student Loan Debt Relief Tax Credit application.
The application process will open again July 1, 2023 through September 15, 2023.
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 each year are set out in Section 10-740(D) of the Tax General Article of the Annotated Code of Maryland and in 13B.08.17.05 of the Code of Maryland Regulations (COMAR).
The Commission shall prioritize tax credit recipients and dollar amounts based on qualified taxpayers who:
- Did not receive a tax credit in a prior year.
- Were eligible for in-state tuition.
- Graduated from an institution of higher education located in Maryland.
- 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 two 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. Failure to do so will result in recapture of the tax credit back to the State.
Payments to lenders may consist of principal and/or interest and may be paid in a lump sum and/or installments.
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 2 years. Any loan deferment, forbearance, or forgiveness programs will not change this nor have any effect on the terms.
To show proof of your college loan payments, log onto your OneStop account and attach your documents there.
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.