Disability Advocates Urge Passage of Student Loan Measure

tax form, tax return, money

by Andy Jones
March 25, 2017

In a letter to legislators sent last month [PDF], the nations’ largest coalition of disability rights advocates urged passage of a new bill, known as the Stop Taxing Death and Disability Act.

Under federal law, student loans can be only forgiven in two circumstances: where the borrower dies, or meets the rigid criteria of having a “total and permanent” disability.

Although students, or the parents of the students, who meet these categories no longer have to pay back these loans, the money left over on them is treated as income by the Internal Revenue Service.

The Stop Taxing Death and Disability Act, introduced in the Senate on February 16, would discharge any liability on these loans.

“Congress recognized in 1965 that having a work limiting disability can make it impossible for an individual to pay back their student loans in some circumstances and as a result passed the provision allowing for the discharge of student loans due to total and permanent disability,” the Consortium for Citizens with Disabilities wrote in the letter. “Unfortunately this discharge is currently treated as income for tax purposes creating thousands and sometimes tens of thousands of dollars of tax liability for an individual whose loans are discharged.

“This makes no sense. An individual with a disability who cannot afford to pay back their student loans cannot afford to pay back a tax debt either.” 

The National Disability Rights Network and 28 other disability rights groups signed onto the bill.

Disability Rights Washington is the designated protection and advocacy agency in Washington and a member of the National Disability Rights Network.