Why Obama is forgiving the student loans of nearly 400,000 people https://t.co/5XCbIbj5bY
— David Amrod (@bendybubble) April 13, 2016
The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can’t work because of a disability to have their loans forgiven. The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.
If every borrower identified by the Department decides to have his or her debt forgiven, the government will end up discharging more than $7.7 billion in debt, according to the Department.
“Americans with disabilities have a right to student loan relief,” Ted Mitchell, the undersecretary of education, said in a statement. “And we need to make it easier, not harder, for them to receive the benefits they are due.”
...Eligible borrowers who do decide to take advantage of the discharge option should be aware that the forgiven debt may be considered taxable income. The Obama administration asked Congress in its 2017 budget proposal to get rid of the tax penalties for disability discharges, but meanwhile borrowers may find themselves paying taxes on the forgiven loans.
