Maryland residents may be eligible for up to $5,000 to use to repay student loan debt through a new program run by the Maryland Higher Education Commission (MHEC). For 2017, this is a great opportunity to reduce student loan debt if you meet the following qualifications:
- You are a Maryland resident for the current tax year,
- You incurred at least $20,000 of undergraduate student loan debt, and
- You have at least $5,000 remaining outstanding on that student loan debt when submitting an application.
To apply, complete a simple application and submit it along with a college transcript, loan documentation, and a copy of your 2016 Maryland income tax return. The application signature must be notarized.
MHEC has up to $5 million to distribute in student loan debt relief. MHEC will prioritize applicants who have higher debt burden to income ratios or paid in-state tuition to a Maryland undergraduate institution, but the impact of those prioritizations will not be determined until all applications have been received.
The program will operate via Maryland state income tax credits. Any approved applicant must use the amount of the credit awarded by MHEC to pay down undergraduate student loan debt within 24 months then provide proof to MHEC. Failure to provide proof will lead to recapture of the credit.
Added details per MHEC:
The use of the credit toward student loan debt repayment includes your regular monthly payments. If your monthly payments are at least $208.34, you would satisfy the repayment obligation by continuing to make your routine monthly payments.
The 24-month timeframe in which you must make the student loan debt repayments considers calendar years. So the 24-month period for a credit received on a 2017 income tax return would include 2018 and 2019.
The program is intended for students with debt in their own names. If parents hold student loan debt on behalf of their children, they are not eligible to apply for the credits.
Our take? If you qualify to apply, this is a great deal. There is a little bit of paperwork to complete with the application (but not much!) and then some follow-up paperwork if you receive a credit. As long as you use the amount of the credit to pay down student loan debt over the next 24 months, you have complied with the requirements to use the credit.
For more information and to download the application, visit MHEC’s website here: http://mhec.maryland.gov/preparing/Pages/StudentLoanDebtReliefTaxCredit.aspx
For more information on the tax advantages of the student loan debt relief opportunity, please contact Joe Musumeci at 443‑725‑5395.
