Student Loans are a headache! Many people find it necessary to borrow money in order to continue their education – the struggle begins once the lender starts asking for that money back! Although student loan interest is deductible on your tax return (up to $2,500), most would agree the burden of paying off student loans isn’t worth the deduction. However, additional relief of up to $5,000 is now being offered by the Maryland Higher Education Commission (MHEC)! Here are the details of the program:
The relief being offered is in the form of a Maryland Income tax credit. The credit of up to $5,000 is for those that have “qualifying” undergraduate student loan debt AND are a Maryland resident. What you need to know:
What exactly is “qualifying” debt?
1) Original loan must have been at least $20,000 AND used to pay for undergraduate education
2) $5,000 of the original loan must still be outstanding
How do you apply for the credit?
1) You must complete an application and submit it to the MHEC by September 15th of the tax year for which you are applying – THAT MEANS NEXT FRIDAY for those seeking relief this tax season!
2) You will need to provide proof of the loan, an official copy of your college transcript, and a copy of your most recent Maryland tax return. These items must be submitted with the application!
How much credit can you qualify for?
1) The maximum credit is $5,000
2) The MHEC has a pool of funds totaling $5 million, so depending on how many people apply, credits may be limited
3) The MHEC will prioritize the relief given based on each applicant’s information:
a. Debt to income ratios
b. Alumnus of a college located in Maryland
c. How much credit was award in a prior year
d. State tuition eligibility
This is an opportunity for many people to use their burdensome student loans for a potential benefit - take advantage! And as always, feel free to reach out to us with any questions you may have about the program.