Consumer Watch: Changes in student loan discharge
OKLAHOMA CITY (KOKH) —
People with severe disabilities struggling with student loan debt can now get more help. Hundreds of thousands of people with severe disabilities who have student loans, could benefit from a change in the law after their student loans are forgiven-- that's according to the government’s Consumer Financial Protection Bureau.
If you had your student loans forgiven on or after January first of this year because of a total and permanent disability, you will no longer have to pay federal income taxes on those forgiven loans, according to the CFPB.
Maybe you didn't even know you could have your loans forgiven if you were facing a major disability. The following people may qualify for this type of student loan discharge:
- Veterans the VA says are "unemployable" because of a service related disability.
- People on social security benefits because of a disability.
- Even people deemed permanently disabled by a doctor.
In 2016, the Department of Education and the Social Security Administration found 387-thousand borrowers with disabilities. According to the data, this group owed nearly 8-billion dollars with nearly half in default. Many of them didn't know they qualified for a loan discharge.
The latest change means now they will not face any tax burdens because of the loan discharge.
The Consumer Financial Protection Bureau says that some private student loan lenders also offer disability forgiveness, but are not held to the same standards as federal lenders.
For links to check if you qualify for student loan discharge click here.