Gardberg & Kemmerly, P.C. Attorneys at Law

Student loan discharge could affect SSD benefits

For better or worse, many people in Mobile carry student loan balances. They may work hard to pay down these balances as much as possible. However, some of them may eventually develop a disabling condition. When their disability prevents them from working, they may have no way to pay back their student loans. That being said, relief may be available, although it comes with a catch.

Federal law permits those who have a disability to seek forgiveness of their student loan balances. According to one source, almost 400,000 people in the nation could possibly take advantage of this, as 80 percent of them do not make any income. In 2014, this demographic had a median net worth of only $200, and on average owed $18,000 in student loans.

However, few of these individuals pursue this method of having their student loans discharged. Some of them simply do not know that the law allows them to do so. Moreover, as the law currently stands, when such debt is forgiven by the Internal Revenue Service (IRS), it is deemed to be income. Therefore, those who claim such relief may owe income taxes on the amount that was discharged. If a person cannot pay these taxes, their income could be garnished and, ironically, their Social Security disability benefits could be discontinued.

Time will tell whether this law will be changed. Those who already cannot work due to a medical condition and are relying on SSD benefits to make ends meet do not deserve to lose these benefits simply because they sought to have their student loans discharged, due to their inability to work. Therefore, those who are seeking a student loan discharge due to disability may want to consult with an attorney, so they can better understand what how the discharge may affect their SSD benefits.

Source: legalscoops.com, "Social Security Disability and Student Loan Relief: A Taxing Problem," April 23, 2017

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