Maryland residents have until Monday, September 15, to apply for the Student Loan Debt Relief Tax Credit.
This credit provides up to $5,000 in relief for the 2025 tax season.
Why It Matters
Millions of student loan borrowers face renewed repayment pressure after federal collections and repayment activities resumed in 2025. This has potentially increased monthly obligations and enforcement risks for borrowers in default.
The Maryland credit aims to ease short-term burdens for qualified in-state borrowers. Nationally, student loan borrowers carry more than $1.77 trillion in student debt, which impacts credit scores and delays home buying and starting a family for many.
What To Know
To qualify for Maryland’s Student Loan Debt Relief Tax Credit, you must be a Maryland taxpayer who maintained residency for the 2025 tax year and filed a Maryland state income tax return for that year.
Applicants also must have an original student loan principal of at least $20,000 and at least $5,000 outstanding at the time of application.
The state allocated a $9 million pool for the 2025 tax year and prioritized certain applicants, including state employees, under program rules.
Most successful applicants are expected to receive an award in the low thousands, with the state putting the average award at around $1,800 to $1,870. However, awards could reach up to $5,000 for eligible borrowers.
The program has been active since 2017, and roughly 85 percent of applicants in a prior cycle received some level of credit, officials said.
The application process takes about 15 to 30 minutes to complete, and the Maryland Higher Education Commission plans to notify applicants who will receive funds by December.
Award recipients were required to apply the funds directly to their student loan balances and provide proof to MHEC within three years; otherwise, they would be required to repay the money.
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “This credit is one of the best in the country for student loan borrowers…Borrowers are eagerly looking for some form of relief, and when many federal assistance programs are winding down or fully eliminated, state initiatives to help student debt holders could be seen as a final alternative to assist.”
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, previously told Newsweek: “Some states have leftover funds from previous programs, and Maryland is putting those dollars to work. 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.”
Bobbi Rebell, a certified financial planner and consumer finance expert at CardRates.com, previously told Newsweek: “This is a great resource for so many borrowers but the clock is ticking. The key here is to go back into student mode and make sure you study all the rules and make sure to follow every single one, leaving no room for error. The slightest technical mistake will cost you dearly.”
What Happens Next
Experts say that other states may adopt the Maryland model and offer similar tax credits, but it will ultimately depend on the specific 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 said. “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.”
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