Written By Caitlin See
According to The Institute for College Access & Success, more than half of the students who attend a Maryland four-year university graduate with an average student loan debt of $30,461.
Fortunately, the state of Maryland has recognized the financial burden that now comes with higher education. As part of Maryland's student loan relief efforts, the state has developed several loan forgiveness and repayment programs to help reduce student loan balances.
Maryland Student Loan Forgiveness
Here are some of the top Maryland student loan forgiveness programs.
1. Maryland Student Loan Debt Relief Tax Credit
The Maryland Student Loan Debt Relief Tax Credit program is available to eligible Maryland taxpayers who have incurred at least $20,000 in student loan debt and have an existing balance of at least $5,000 at the time of application.
However, the income tax credit prioritizes recipients and the award amount based on certain circumstances. For example, the designated Maryland Higher Education Commission weighs whether a credit was received the prior year and considers the borrower's debt-burden-to-income ratio.
You must submit proof of your student loan payment within two years of receiving the tax credit. If you don’t provide proof, you might be responsible for repaying that amount in a subsequent tax year.
Amount: Up to $5,000.
2. Maryland State Loan Repayment Program for Healthcare Professionals
Maryland’s SLRP program recruits and retains health professionals to serve vulnerable communities.
The program uses a mix of federal and state funding sources that include the Maryland Loan Assistance Repayment Program (MLARP). Therefore, both funding pots have their own requirements.
Physicians and physician assistants (PAs) are eligible for SLRP federal funds. To qualify, you must practice as a full-time primary care physician at a public or nonprofit medical facility. But it must be located in a designated Health Professional Shortage Area (HPSA) or medically underserved area (MUA).
Whereas federal funding can be used for physicians and PAs, state funding can also be used for medical residents in their last year of residency. Recipients can work at a nonprofit or for-profit medical facility located in an HPSA, MUA or a rural county.
Note that if you qualify for this program, you should check out Maryland physician mortgage loan programs if you're in the market for a home.
Amount: Up to $100,000 per year for a two-year service obligation.
3. Janet L. Hoffman Loan Assistance Repayment Program
The Janet L. Hoffman Loan Assistance Repayment Program is available to Maryland residents in the public or nonprofit sector serving low-income or underserved communities.
Eligible fields include lawyers, nurses, licensed clinical counselors, physical and occupational therapists, social workers, speech pathologists, and teachers. To qualify, you must have earned a degree from an institution in Maryland. Additionally, your annual gross income must be below $75,000 if single and $150,000 if married.
Amount: Up to $30,000 distributed over a three-year period, depending on the total debt reported on your application.
4. Maryland Dent-Care Loan Assistance Repayment Program
The MDC-LARP program provides student loan assistance to Maryland dentists whose patients include at least 30% of Maryland Medical Assistance Program recipients. However, this program is only available to Maryland residents employed full-time as dentists in the state.
Amount: Up to $23,740 per year for a maximum of three years of service.
5. Maryland SmartBuy Home Buyer Assistance & Forgiveness Program
The Maryland SmartBuy 3.0 program is a unique, innovative model designed to provide a path to homeownership for student loan borrowers.
To take advantage of this program, you must purchase a home in Maryland and have an existing student debt balance of at least $1,000. The state will then contribute up to 15% of the purchase price toward the buyer’s outstanding student loans.
However, the remaining balance must be paid in full during the closing process.
Amount: Minimum of $1000 and up to 15% of the home purchase price ($50,000 maximum).
6. John R. Justice Grant Student Loan Repayment Program
The John R. Justice Grant Program provides repayment assistance to state and federal Maryland public defenders and prosecutors.
This federally funded program requires a three-year service commitment and is awarded based on the recipient’s ability to repay their student loans. The ability to repay is determined by using a ratio of student loan debt to adjusted gross income and a cost-of-living factor.
However, funding is limited as each appellate court district is allocated a specific amount of funds for prosecutors and public defenders.
Amount: Varies.
7. Maryland Loan Assistance Repayment Program for Foster Care Recipients
MLARP for Foster Care Recipients is available to former foster care recipients who graduated from a Maryland institution. You must also work part-time with a state, county or local government.
Eligibility requirements include being a Maryland resident and having been placed in an out-of-home placement by the state’s social services department.
Amount: 10% of total student loan debt or $5,000, whichever is less.
Federal loan forgiveness programs
Maryland borrowers may also be eligible for federal loan forgiveness programs with the U.S. Department of Education. These popular programs include:
- Public Service Loan Forgiveness program (PSLF). Borrowers who work in the public or nonprofit sector may be eligible for tax-free loan forgiveness after 120 qualifying payments.
- Income-driven repayment (IDR) plan forgiveness. Borrowers, regardless of employment, may be eligible for loan forgiveness after making qualifying payments for 20 to 25 years. But they may also pay taxes on the forgiven balance.
To clarify, PSLF and IDR forgiveness are only available to borrowers with federal student loans, not private student loans.
Other options to reduce your student loan debt
If you don’t qualify for any of the Maryland student loan forgiveness programs or for federal programs, refinancing might be a good option to reduce your debt burden.
Student loan refinancing can lower your interest rate, reduce your monthly payment and provide you with better loan terms with private lenders.
But refinancing may not be worth it if you have federal student loans because you’ll lose access to certain federal benefits and protections, such as flexible repayment plans and forgiveness programs.
Before moving forward with refinancing, explore all available state and federal cancellation programs. These programs are essentially free money and can help reduce your student loan balance.
Our team of student loan experts can help you explore all of your repayment options and put you on the most efficient path to becoming student debt free. Schedule a consult today.
Not sure what to do with your student loans?
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