I missed that the big tax bill passed at the end of 2017 contained a change that benefits some disabled individuals. You were already able to get a federal student loan discharged if you are disabled and Social Security had set a five to seven year re-examination date for you. However, the discharge of the debt was considered income to the disabled person which often meant that the discharge could cause an expensive tax liability, which defeats the purpose of giving the discharge in the first place. That was changed at the end of 2017 by 26 U.S.C. §108(f)(5)(A), which provides that the discharge of a student loan debt for this reason is not income. However, this sunsets after 2026 but I doubt it will be allowed to end then.
Unfortunately, the five to seven year re-examination date requirement limits the value of this. I don't know what the numbers are but I'm pretty sure that few who are found disabled by Social Security get a five to seven year re-examination date even though very few have a realistic hope of getting better. I don't know that there are any re-exam dates that long for any sort of mental illness other than profound brain injury.
According to http://www.crfb.org/sites/default/files/constantinporcinocollinszhou.pdf about 35% of awards have the "medical improvement not expected" CDR diary date of 5-7 years.
ReplyDeleteWhat? Five to seven years is basically the default period before a CDR will be done; see 404.1590(d)/416.990(d). It will only be less if the case is coded "medical improvement expected" or "disability not permanent but medical improvement cannot be accurately predicted." I don't know what the prevalence of coding cases to receive short CDRs is at the DDSs but in my hearing office, it is certainly not the majority of cases or anywhere near it.
ReplyDeleteBut for someone who manages to get found disabled by depression, anxiety, etc. ("mental illness other than profound brain injury"), why in the world would medical improvement *not* be expected? Those are eminently treatable impairments.
We could get student loans waived administratively sometimes. The bankruptcy discharge was funny; a person just had to be disabled to do what they borrowed the money to do, not totally disabled, but this did require a hearing and most clients in this category had to hope they could find a legal services lawyer to do this. One of my VERY mentally ill clients was able to get rid of all his student loans with no legal help.
ReplyDeleteMine was wiped clean in 2012, I did not need help or a lawyer, I just had to provide them SSA information and report any earned income to them for 3 years (which I didn't have), then they disappeared. I payed them as much as I could for 10 years on disability, hoping I wouldn't have to have them waived, but the time came that I was falling in debt because of them. I did try for 10 years though, so maybe that's why it was easier for me? They were very kind and nice. Very helpful, I know that sounds like some kind of mystical world I fell into, but yes, indeed, the government was helpful. I didn't know what I was doing, and they walked me through the entire process. Have things changed that drastically since 2012?
ReplyDeleteMost MINE cases are due to the individual being 52 or over regardless of the impairment. I imagine there are still many HIV cases from when that was a MINE impairment and many deaf or blind people and some Down syndrome people who will be helped by this
ReplyDelete@11:59
ReplyDeleteAlthough medical improvement certainly can occur, I am uncertain why you are drawing a distinction at mental illness other than profound brain injury. I'm also not sure what you are quoting. Depression and anxiety are not "eminently treatable," whatever that means, and more importantly, just because treatment methods are available, that does not mean the treatment will result in medical improvement to the extent the individual can actually sustain work.
Why should someone get off paying back a debt just because they become disabled for a few years? The longer diaries are supposed to be for folks that aren't expected to get better, hence can't repay the loan ever.
ReplyDeleteThe 5-7 year SSDI is now and always has been a 'guarantee" of student loan dismissal. That does not mean you cannot get loans dismissed if you have a re-evaluation dates of less. I have a 3 year date and just has my student loans approved for dismissal. I asked my doctor and she filed out a form and it was approved, the only new thing here is that you will not owe the IRS any money after the 3 year monitoring period is over. If during those 3 years you SGA income then the dismissal is terminated. In about 2 1/2 years my loan dismissal will be complete and I will not have to report this as Federal Taxable Income. Obama or someone else who claims to be an advocate of the helpless should have done this a long time ago..it took Donald Trump to do it. All Obama ever did for me is take away my Safelink service in 2016.
ReplyDeleteI've been a member of SSDI/SSI forums for many years. People fairly easily get their student loans discharged prior to SSA disability being awarded (often after being denied twice by SSA and while still waiting for a hearing) and people with less than MINE diaries fairly easily get their student loans discharged as well.
ReplyDeleteThose with mental impairments and those with physical impairments both can get their loans discharged. It's fairly simple. One of your doctors just has to fill out a one page certification and you almost always get approved, at least from what I can tell from anecdotal evidence. I've yet to hear of someone (in the forums) being turned down. With MINE, it's automatic but for less than MINE, they just make you jump through a little hoop (figuratively speaking), i.e. have a doctor comeplete the certification form. You don't even have to be approved for SSDI or SSI to apply for the TPD discharge.
There was one person that I can recall who submitted the doctor certification and nelnet actually followed up with the claimant to let them know his/her doctor had to include the word "severe" in the response to one of the line items and resubmit. And nelnet sent an additional form out for the doctor to complete about not being able to perform SGA. That was very helpful of nelnet.
The only thing one has to be careful of is the 3-year monitoring period directly following the loan discharge. Otherwise, it's smooth sailing, especially now that there's no pesky tax stuff to worry about.
By the way, I paid off my (limited) student loans in their entirety with my first year's salary out of college while saving on rent and expenses by living at home. Little did I know I would become disabled after that year.
Does anyone know if a cosigner becomes disabled if they can be released from liability?
ReplyDeleteCosigner is parent of student who defaulted, has no money, and no interest in making any payments. Co-signer is having his SS reduced by payments to SallieMae.
@6:30
ReplyDeleteI imagine that would depend on the type of loan. I believe parents can seek discharge of parent PLUS loans due to the parent's disability.
@10:56pm
ReplyDeleteThe Stop Taxing Death and Disability Act was a bipartisan bill, provisions of which made it into a tax bill that President Trump signed into law. Whether it had been President Trump or President Obama who signed the tax bill into law, I would give 99% of the credit to the congresspeople who crafted, introduced and/or supported the Stop Taxing Death and Disability Act.