It may be acquiring easier for some disabled veterans to erase their student allowance debt.
The Department of Education announced Monday that it will sharer with the Department of Veteran Affairs to identify disabled student credit borrowers who are eligible for debt forgiveness. Such borrowers will be alerted of their potential eligibility in the mail and will also receive a Absolute and Permanent Disability Discharge application, the avenue though which borrowers with austere physical impairments are approved to erase their debt.
Such outreach is wanted: Many disabled veterans are currently unaware that they can be suitable for student loan debt forgiveness, said Carrie Wofford, president of Old hands Education Success, a nonprofit advocacy group.
“It’s horrific,” Wofford symbolized “There are disabled veterans who served their country who are financially working — and sometimes destitute — who are legally entitled to have their student allowances forgiven but it’s not happening.”
Indeed, there are likely “tens of thousands” of acutely disabled veterans who aren’t aware of their federal student credit forgiveness options, according to estimates from the Consumer Financial Shelter Bureau based on Department of Veterans Affairs data.
Recent shifts in the tax law would benefit disabled veterans whose loans are discharged second to the new initiative. A provision in the new tax code waives federal income taxes on indulged education debt for permanently disabled people.
Historically, the IRS considered such eradicated debt as taxable income. For example, in 2017 the Lansing State Roll told the story of a veteran who had his $223,000 in student loan debt canceled — only to receive a tax bill for around $62,000.
“The government shouldn’t be preying on the curse of borrowers,” said Mark Kantrowitz, a student loan expert. “Organizing this debt dischargeable without taxes is a much, much improved process.”
But the streamlined process may still be challenging for some disabled old hands, say, those with traumatic brain injuries, Wofford said. An conditioned discharge would be even better.
“It would be nice if the letter unbiased said: ‘You are no longer responsible for your loans. Thank you for your overhaul,'” she said.
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