Family and Caregiver Schizophrenia Discussion Forum

Student loan disability discharge- CHANGE- its good news!

#1

Just read that the FEDERAL tax laws have changed regarding the discharge (forgiveness) of student loans due to Total and Permanent Disability. Used to be that the discharged loan amount was considered as income and if people had any income (like if their spouse worked) they could be taxed on the total amount that was discharged.

From disabilitydischarge.com


Form 1099-C

As a result of a change in tax law, loan balances that are discharged due to TPD are not considered income for federal tax purposes if you receive the discharge during the period from January 1, 2018 through December 31, 2025. If you qualify for a TPD discharge based on documentation from the VA, the date you are considered to have received the discharge for tax purposes is the date that we approve the discharge. If you qualify for a TPD discharge based on documentation from the Social Security Administration or a physician’s certification, the date you are considered to have received the discharge for tax purposes is the completion date of your three-year post-discharge monitoring period.

If you receive a Form 1099-C, you should keep the form for your records, but you do not need to include it when filing your federal tax return. For additional information, visit irs.gov.

The discharged loan amount may be considered income for state tax purposes. You may want to consult with your state tax office or a tax professional before you file your state tax return.

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#2

Good to know. My son was approved for loan forgiveness on his student loans due to permanent Disability in September 2017 and for every year, I must submit a form to Verify his status for 3 years and after that all his loans will be forgiven.
so he is still have 2 mores years to discharge all his students loans according this:

If you qualify for a TPD discharge based on documentation from the Social Security Administration or a physician’s certification, the date you are considered to have received the discharge for tax purposes is the completion date of your three-year post-discharge monitoring period.

How is everything Hope. hope is all is well.
I have not been checking this forum for a while… busy with various personal issues

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#3

My son just finished the 3 year post-discharge monitoring period in May of 2018. I was so relieved to have those loans gone, they were from grad school. We had already paid off his university loans. I’m glad your son’s loans were discharged.

Things are currently good JARCA2016, thanks, I hope your son is doing well.

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#4

Bumping this thread…

A person has to be totally and permanently disabled to qualify for federal student loan discharge (forgiveness)

My understand is that the loans that are forgiven are the government backed student loans.

From what I recall, the spouses income didn’t have anything to do with qualifying for the discharge. It used to be that you would have to pay taxes on the discharged amount - which would be based on your combined income. (that’s what this thread is about) The laws changed and could change again.

My son had been determined as totally and permanently disabled through his ssdi application. His doctor also was sent forms to complete the process.

How much the disabled person does earn is a factor.

disabilitydischarge.com has information, you shouldn’t pay anyone to apply for your family member for this discharge, it’s not that complicated.

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#5

Thank you for this. I inherited the process after my son’s divorce. I assumed it was already forgiven. So my inept attempts did nothing I think but start the process all over. His loan amount is pretty small as it was a community college, but he does not have the funds to take care of it.

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