STUDENT loan borrowers are being warned that they have just days left to apply for the Student Loan Debt Relief Tax Credit.
Loanees face a September 15 deadline to get their hands on the credit, which provides up to $5,000 in relief for the 2025 tax year.
Student loan borrowers owe the government over $1.7 trillion[/caption]
Borrowers are running out of time to get their hands on a $5,000 tax credit[/caption]
Across the US, student loan borrowers owe over $1.77 trillion to the federal government – heavy debt that not only can impact their credit scores but also delay major life milestones such as buying a home or getting married.
Now that the federal government has resumed collections and repayment activities following a pause, millions of loanees are being hit with repayment pressure once again.
This change could mean higher monthly payments and a greater risk of legal action for borrowers who are in default.
In an effort to ease short-term burdens for qualified in-state borrowers, Maryland is handing out $5,000 tax credits.
Eligible state residents have until Monday, September 15, to submit their applications for the Student Loan Debt Relief Tax Credit.
The program has been up and running since 2017, handing out much-needed relief to borrowers.
Experts are urging residents to apply, given the high rate of those normally accepted.
Around 85% of applicants in a prior cycle received some level of credit, according to program officials, with the application process taking just 15 to 30 minutes.
“Most people that apply do qualify for some amount of money, so we want to make sure that people know, don’t count yourself out, because it is very likely that you will qualify for at least some amount of money,” Kristin Clarkson, communications director at the Maryland Higher Education Commission, or MHEC, told Baltimore station WMAR-2 News.
MHEC intends to reach out to the applicants selected in this payment round by December.
The selected participants must apply the funds directly to their student loan balances and provide proof to MHEC within three years.
Those who fail to do so will be required to pay back the money.
ARE YOU ELIGIBLE?
There are several requirements in place that applicants must meet in order to be eligible for the $5,000 credit.
For example, borrowers must be a Maryland taxpayer who lived in the state for the 2025 tax year and filed a Maryland state income tax return for that year.
Student Loan Statistics
- Student loan debt in the US is over $1.777 trillion
- Federal student loan debt accounts for 92.2%
- Average federal student loan debt amount per person is $38,375
- Students at a public university borrow $31,960 on average to attain a bachelor’s degree
Credit: Education Data Initiative
Residents are also required to have an original student loan principal of $20,000 or more as well as at least $5,000 outstanding when they apply.
The state of Maryland set aside $9 million for the 2025 tax year, prioritized certain applicants such as state employees under program rules.
While the average award will sit at around $1,800 to $1,870, certain eligible borrowers could see rewards worth up to $5,000.
Applicants may apply each year, but they must present the necessary documents from their loan services and tax preparers.
“Some states have leftover funds from previous programs, and Maryland is putting those dollars to work,” Kevin Thompson, CEO of 9i Capital Group, told Newsweek.
“It makes sense – if you’re buried in student debt, you’re probably not spending much, and that means less tax revenue for the state.
“By freeing up some of that burden, the state hopes folks can spend more, maybe save more, and eventually put more money back into the local economy.”
Other states may potentially adopt the Maryland model and offer similar tax credits, according to experts, although it will ultimately depend on their state budgets.
“I do believe other states could follow but it is all based on the state budgets and what has or will be provided by the government,” Thompson told the outlet.
“As we know, much of that funding has been clawed back by the current administration so I don’t see much of this moving forward.”
Millions of borrowers are skipping their student loan payments in a costly protest – but experts have warned of “severe consequences.”
Plus, many are also now scrambling to keep up as interest has resumed, hiking monthly payments by as much as $300.
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