Student Loan Forgiveness for Disabled VeteransUpdated: March 26, 2021
President Trump has signed an executive order directing the Department of Education to forgive all federal student loan debt owed by veterans who are “completely and permanently” disabled. The presidential memorandum also clears those eligible veterans from having to pay any federal income tax on the loans.
The Higher Education Act of 1965 and updated Higher Education Act of 2008 discharged the student loan debt for “totally and permanently disabled” veterans. However, veterans seeking loan discharges have been required to submit an application to the Secretary of Education with proof of their disabilities obtained from Veterans Affairs. The process has been overly complicated and difficult and prevented too many of our veterans from receiving the relief for which they are eligible. This has inflicted significant hardship and serious harm on these veterans.
Only half of the approximately 50,000 “totally and permanently disabled” veterans who currently qualify for the discharge of their Federal student loan debt have availed themselves of the benefits provided to them due to a burdensome process. Trump said he was “taking executive action to ensure that our wounded warriors are not saddled with mountains of student debt,” vowing to “eliminate every penny of federal student loan debt owed by American veterans who are completely and permanently disabled.” The move will wipe out “hundreds of millions” in student loan debt owed by more than 25,000 disabled veterans, Trump said. The average amount forgiven would be about $30,000, he said. This represents a fraction of the national student loan debt amount, $1.6 trillion, the largest non-mortgage debt in the U.S.
The executive action directs the government to develop an expedited process so veterans can have the debt discharged “with minimal burdens.” The executive order also directs the Education Department to automatically identify veterans eligible for loan forgiveness and give them the option to opt-out for 60 days before moving ahead with canceling the debt. Additionally, Trump called on all 50 states to immediately “waive all applicable state taxes” on the forgiven loans.