Disabled veterans can get student loan debt forgiveness through a new law signed by President Donald Trump on August 21, 2019. This law provides automatic student loan debt forgiveness to eligible disabled veterans.
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How does this law differ from the previous one?
If you’ve visited this website before, you may recall that we’ve already found total student loan debt forgiveness for disabled people.
The new law that President Trump signed offers two key differences:
First, the student loan debt will be erased automatically unless the veteran decides to opt-out of the forgiveness process. It is expected that 25,000 eligible veterans will receive immediate forgiveness and new eligible veterans will be notified each quarter.
Second, veterans will not owe any federal income taxes on the discharged student loan debt. This is a tremendous relief to those who would otherwise owe thousands of dollars as a result of the debt forgiveness process. Unfortunately, states can still assess state income taxes on the discharged debts. Trump has urged states to absolve veterans of that liability but they are not required to comply with this request.
Which disabled veterans are eligible for student loan debt forgiveness?
Veterans must be considered permanently and totally disabled by the Department of Veteran’s Affairs in order to receive forgiveness. This can be accomplished by getting a 100% disability rating or applying for Individual Unemployability.
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This isn’t the only benefit that comes from having a P&T disability rating from the VA! Veterans with this rating may also be eligible for property tax exemptions, free vehicle registration, and more!
Eligible veterans can choose to decline forgiveness.
Veterans who are eligible for student loan debt forgiveness will now be notified that their forgiveness is being processed. If they do not want the forgiveness to occur, the veteran must respond within 60 days to stop the forgiveness process.
Receiving forgiveness may result in tax liability. It may also make it more difficult to obtain student loans in the future. These are two reasons why some disabled veterans may choose to decline forgiveness.