Both the DoE (Department of Education) and Department of Veteran Affairs are working together to identify service-related disabled veterans who borrowed federal money for student loans. These eligible borrowers are then notified through the mail that they could be eligible for the Total and Permanent Disability Discharge. With the notification, they receive an application to fill out to eliminate the debt.
The DoE currently is unable to discharge these loans automatically, as borrowers must show proof of their disability. Experts agree that the new program is a step up, reaching out to these eligible disable veterans who may not be aware that they could be free of their student loan debt.
The Consumer Financial Protection Bureau states that tens of thousands of disabled veterans may not know that they can qualify for the protection.
Betsy DeVos, secretary of the DoE, said making the process easy to forgive loans and find those veterans who have federal student and notify them of their eligibility is a minute but important way to show these servicemen and women the nation’s gratitude.
What should disabled veterans know about discharging student loan debt?
- The federal tax penalty no longer applies to student loan forgiveness if forgiven due to permanent disability. Before the overhaul, the discharged debt was subjected to being noted as being taxable income, which led to a larger tax bill in the next year.
- Veterans are no longer required to submit documentation that supports their TPD discharge if contacted by the Department of Education.
- Veterans can start the process online. The DoE will send information about the TPD discharge to eligible veterans. However, those who qualify can start the process online before they are notified but may still be required to submit supporting documents.
