Lawmakers back SB 805 to prorate student loan tax-credit recapture, extend spend-down windows

A representative for Senator Hettleman asked the Ways and Means Committee to support Senate Bill 805, which would adjust Maryland's student loan tax-credit recapture rules and give the Maryland Higher Education Commission limited authority to extend claim periods for affected borrowers.

Corinne Wissman, speaking for Senator Hettleman, said SB 805 "converts the recapture rule from an all-or-nothing clawback to a prorated model," so a borrower who uses only part of a credit would repay only the unused portion. "So in the previous example, the borrower would only have to pay a $50 repayment instead of the $1,000," she said. The bill also would allow the Commission to extend the spend-down window for borrowers stalled by federal income-driven repayment backlogs or litigation.

Wissman said the bill does not give windfalls but ensures borrowers are not punished for federal delays, and she requested a favorable report. The committee heard no agency opposition during the presentation and recorded no vote at the hearing.

Testimony: Corinne Wissman (on behalf of Senator Hettleman).