More than 9,000 residents in Maryland got almost $9 million in tax credits to pay their student loan debt. This tax credit for student loan debt is part of the program that has been running since 2017 and offers a great opportunity to residents struggling to pay off their student loan debt.
Tax Credit For Student Loan Debt: What Is It?
Last week, Governor Wes Moore announced that the Maryland Higher Education Commission had distributed nearly $9 million in 2022 tax credits to over 9,000 residents with student loan debt.
“This program offers Maryland residents a critical advantage when looking for options to pay off student loan debt,” Gov Moore said in a statement. “These tax credits support student success through less debt.”
As mentioned above, the program is not a new program. The program has distributed about $50 million in tax credits since it started in 2017. This year, the program awarded an average credit of $966 to over 9,300 residents, totaling $8,996,358.
To qualify for the tax credit, taxpayers should have incurred a minimum of $20,000 in undergraduate and/or graduate student loan debt. Also, they should have a minimum of $5,000 in outstanding student loan debt to be eligible for the credit.
Taxpayers will be able to claim the credit when they file their Maryland income tax return this year. In case the credit is more than the taxes owed, taxpayers will get a refund for the difference. Further, taxpayers who maintained Maryland residency for the 2022 tax year were qualified to apply for the credit.
Recipients of the credit will be required to submit proof to the Maryland Higher Education Commission that they used the tax credit only for paying down the qualifying student loan debt.
Who Gets Priority?
To apply for the credit, taxpayers need to complete the Student Loan Debt Relief Tax Credit application. It must be noted that the application process is now closed for this tax year (2022).
Priority for the credit is given to taxpayers who didn’t get the tax credit in a prior year, were eligible for in-state tuition, graduated from an educational institution situated in Maryland, or have higher debt burden to income ratios.
For more information on the tax credit for student loan debt, visit this link.
Tax credits to help residents pay student loan debt is a useful and needed measure, especially at a time when prices are rising. In the fourth quarter of 2022, the total outstanding student loan amount was $1.76 trillion, compared to $1.73 trillion one year ago.
As per the latest data from the Federal Reserve, 12% of adults with student loan debt are behind on their payments, while less than 1% of all student loan debt was at least 90 days delinquent or in default in the fourth quarter of 2022.