Senators Seek Student Loan Tax Break for Severely Disabled, Including Vets By Kellie Lunney May 3, 2016
The Stop Taxing Death and Disability Act would eliminate the tax that the Internal Revenue Service levies on forgiven student loan debt, considered income, as a result of death or disability. The bill also would relieve the tax debt on discharged student loans for families whose child has died, or has developed permanent disabilities.
The Education Department and many private student loan lenders forgive student loans on behalf of borrowers if their child dies, or the borrowers themselves are rendered permanently disabled or develop severe chronic health conditions. But the IRS tax penalty on the cancelled debt can be thousands of dollars.
“Taxing people who have had their federal and private student loans canceled due to a total and permanent disability or because of the death of their child is grossly unfair and defeats the purpose of those loan cancellation programs,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project.
About time someone steps up and steps in!