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With student loan payments climbing again, Maryland residents have a chance to cut hundreds, even thousands, from their debt through a state tax credit program. But time to apply is running out.

As of August 1, interest resumed on federal loans under the SAVE Plan, impacting more than 7 million borrowers nationwide. In Maryland, the Student Loan Debt Relief Tax Credit offers a way to chip away at balances and save money over the life of a loan.

For borrowers like Cam Hardin, the relief can make a big difference.
“It is so high, it’s scary,” Hardin said about her $1,100 monthly payment. “I dissolved into tears because I was very concerned.”

She’s far from alone, Pew Research reports that one in four U.S. adults under 40 carries student debt, with the median borrower owing between $20,000 and $25,000. In Maryland, undergraduates leave public institutions with about $22,000 in debt, while graduates from the state’s HBCUs average $28,000.

How the Credit Works
The Maryland Higher Education Commission (MHEC) offers the tax credit to residents who:

  • Maintain Maryland residency for the 2025 tax year
  • File 2025 Maryland state income taxes
  • Initially incurred at least $20,000 in student loan debt
  • Still owe at least $5,000 when applying
  • Are actively making loan payments

The average credit is about $1,870, but awards can reach up to $5,000. Last year, 85% of applicants received a credit, and there’s no limit to how many years you can apply. This year, the total award pool is $9 million, with state employees receiving priority.

Applications are due September 15. MHEC urges borrowers to start early, since gathering documentation from lenders and tax preparers can take time.

Recipients must apply the full credit amount toward their student loan debt and have three years to provide proof. Applicants will be notified by December if they’re approved.

Need Student Loan Relief? Maryland Tax Credit Could Save You Up To $5K  was originally published on wolbbaltimore.com