Student Debt Relief Act Of 2019

Important Legislation Expands Promise Scholarship Program, Provides Much Needed Tax Relief To StudentsNote: Senate Education, Health and Environmental Affairs Committee to Hold Hearing on SB 88 on Wednesday, February 20, 2019, 1:00 PM

“In Maryland, nearly 60 percent of all of our college students are graduating with thousands of dollars in student debt. This financial burden is preventing young Marylanders from achieving financial security and has become a roadblock to home ownership and saving for retirement.” - Governor Larry Hogan, July 16, 2018

Student Debt Relief Act Of 2019

Governor Hogan’s Proposed Legislation Expands The Maryland Promise Scholarship Program To Include Four-Year Maryland Public Institutions; Students Who Qualify For, And Fulfill The Graduation Requirements Of The Promise Scholarship Will Be Eligible To Receive Free Tuition For The Remaining Two Years. “There is a program of Maryland Promise Plus Scholarships in the State that are awarded under this subtitle. The purpose of the program is to provide tuition assistance for students to attend an eligible institution in the State… An applicant is eligible for a Maryland Promise Plus Scholarship if the applicant… Is a student at a community college in the State… Will have earned an associate degree from a community college in the State by the end of the semester in which the applicant plans to transfer; Has been accepted for admission to an eligible institution; Intends to enroll at an eligible institution to complete a bachelor’s degree program…” (“Senate Bill 88,” Maryland General Assembly, 1/11/19)

The Governor’s Proposal Will Double The Deduction For Families Participating In Maryland 529 Savings Plans From $2,500 To $5,000. “The subtraction under subsection (a) of this section includes the amount of advance payments of qualified higher education expenses made by an account holder or a contributor during the taxable year as provided under a prepaid contract in accordance with the Maryland Senator Edward J. Kasemeyer Prepaid College Trust. Subject to paragraphs (4) and (5) of this subsection, for each prepaid contract, the subtraction under paragraph (2) of this subsection may not exceed [$2,500]: $3,750 for a taxable year beginning after December 31, 2018, but before January 1, 2020; or $5,000 for any taxable year beginning after December 31, 2019.” (“Senate Bill 88,” Maryland General Assembly, 1/11/19)

Under Governor Hogan’s Proposed Legislation, Governor Hogan Would Allow Marylanders To Deduct 100 Percent Of The Interest Paid On Their Student Loans From Their State Income Tax Return. “Subject to subparagraph (II) of this paragraph, the subtraction under subsection (a) of this section includes an amount equal to: 1. 50% of the interest paid on a qualified student loan by the qualified taxpayer during a taxable year beginning after December 31, 2018, but before January 1, 2020; or 2. 100% of the interest paid on a qualified student loan by the qualified taxpayer during a taxable year beginning after December 31, 2019.” (“Senate Bill 88,” Maryland General Assembly, 1/11/19)

The Governor’s Student Debt Relief Act Of 2019 Would Provide Maryland Students With Provide Students With $151 Million In Tax Relief Over The Next Five Years. (Maryland Department Of Budget And Management)

Governor Hogan Has Fought To Make Higher Education More Affordable

Governor Hogan Supported And Enacted Legislation To Establish The Maryland Promise Scholarship, To Cover The Cost Of Community College For Qualified Students. “Scholarships of up to $5,000 to students whose families earn less than $125,000 a year and adults earning less than $90,000. It is a last-dollar program, meaning the state would cover tuition left over after factoring in other scholarships and grants. To qualify, prospective students must enroll in one of Maryland’s 16 community colleges within two years of finishing high school or obtaining a GED. Students must take 12 credit hours of courses and have a high school grade point average of 2.3.” (Danielle Douglas-Gabriel, “Maryland Governor Plans To Sign Free Community College Bill Into Law,” The Washington Post, 5/4/18)

Governor Hogan Introduced Legislation And Enacted The Maryland SmartBuy Program, The First Program Of Its Kind In The Nation; Provides Graduates With Home Ownership Opportunities And Student Loan Debt Assistance. “Maryland is making a play for a generation of would-be homebuyers with one thing in common: student debt… SmartBuy uses an innovative model to clear a path to homeownership. If a buyer has at least 5 percent for a down payment, the state will provide up to 15 percent of the purchase price toward outstanding student loans. Any remaining balance must be paid in full by the closing date.” (Danielle Douglas-Gabriel, “This Program Could Revolutionize Homeownership For Student Loan Borrowers,” The Washington Post, 11/24/16)

• In July 2018, Governor Hogan Announced An Expansion Of The Maryland SmartBuy Program. “Maryland SmartBuy helps homebuyers with qualifying student debt purchase a home. Today’s $3 million expansion to the program, and Hogan administration commitment to double to $6 million in funding over the next year, works by paying off student debt during the purchase of the home through special Maryland Mortgage Program (MMP) financing.” (Press Release, “Governor Larry Hogan Announces College Affordability & Student Debt Relief Initiatives,” Office Of The Governor, 7/16/18)

Governor Hogan Signed An Executive Order Creating The Maryland SmartWork Program To Help State Employees Receive Increased State Assistance To Repay Student Loans. “Maryland SmartWork will offer Maryland state employees working in specified shortage areas – such as correctional officers, nurses, and IT workers – the opportunity to receive state assistance to repay their student loans. Current state employees working in those areas that are paying down their children’s student loans also qualify for this benefit. To enact this program, the governor signed Executive Order 01.01.2018.17, Student Loan Repayment Benefits to Relieve State Workforce Shortages.” (Press Release, “Governor Larry Hogan Announces College Affordability & Student Debt Relief Initiatives,” Office Of The Governor, 7/16/18)