“It’s horrific,” Wofford said “There are disabled veterans who served their country who are financially struggling — and sometimes destitute — who are legally entitled to have their student loans forgiven but it’s not happening.”
Indeed, there are likely “tens of thousands” of severely disabled veterans who aren’t aware of their federal student loan forgiveness options, according to estimates from the Consumer Financial Protection Bureau based on Department of Veterans Affairs data.
Recent changes in the tax law would benefit disabled veterans whose loans are discharged under the new initiative. A provision in the new tax code waives federal income taxes on forgiven education debt for permanently disabled people.
Historically, the IRS considered such cancelled debt as taxable income. For example, in 2017 the Lansing State Journal told the story of a veteran who had his $223,000 in student loan debt erased — only to receive a tax bill for around $62,000.
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