Maryland residents with $20,000 in student loan debt can apply for a tax credit by September 15.
ANNAPOLIS, Md. — If you pay taxes in Maryland, and still have at least $20,000 left in student loan debt, you likely qualify for the student loan debt relief tax credit, but you’ll have to act fast. The deadline to apply is Sept. 15.
The application takes about 15 to 30 minutes to complete and needs to be submitted through the Maryland Higher Education Commission website.
Most taxpayers who apply will receive an average of $1,800, with a maximum amount of $5,000.
Applicants approved for the credit will be notified in December and will have three years to show they’ve applied the credit to their loan balance, or be on the hook to pay that money back.
Maryland’s Higher Education Commission says Maryland residents completing a four-year public institution program typically graduate with about $22,000 of debt, and for an HBCU it’s about $28,000.
If you are still planning to pay college tuition, financial experts say the best way to save for college is through a 529 plan. Every state has one.
“You put the money in, it grows without any taxes, and if you take the money out later and pay for a qualified education expense, no tax on all the accumulation,” said Jill Schlesinger, a business analyst for CBS News.
In order to maximize the tax benefits, experts say you can contribute $19,000 per year per beneficiary to a 529 plan before triggering the federal gift tax. For married couples, that doubles to $38,000.
Click here to access the application.