As student loan debt around the US continues to place household budgets in peril for borrowers of all ages, what is now a full-blown crisis means that over 45 million borrowers are in debt to a cumulative total of $1.6 trillion. And to say that some graduates, and non-graduates alike, are immensely burdened could not be more true; in fact, many of these borrowers are being forced to put their lives on hold while they attempt to make strapping monthly payments which may be over $400 a month or more on average –a frightening statistic for borrowers in the 20- to 30-year-old range.
There are obvious and inherent challenges in getting out in the world, especially for young adults who may have recently graduated from college (or did not graduate but are still responsible for loans); however, most will concur that it should not be so difficult to attain an education and look forward to the potential for thriving afterward.
Many borrowers are forced to file for bankruptcy, although the student loan may be one of the only debts they cannot see discharged within the process, ironically. And even though financial analysts and government officials seem enormously concerned about the student loan crisis that continues to grow, life does not seem to get any easier for borrowers. Many repayment programs still do not seem realistic for many—and overall, and forgiveness and cancellation programs seem rare.
Now though, disabled veterans are being given a break. This is a great start for student loan borrowers under financial duress, as President Trump earlier this year signed an executive action forgiving certain federal student loans for veterans who are permanently disabled:
“I am proud to announce that I am taking executive action to ensure that our wounded warriors are not saddled with mountains of student debt,” said President Trump. “They have made a sacrifice that’s so great. And they’re such incredible people. And they never complain. They never complain. That’s hundreds of millions of dollars in student debt held by our severely wounded warriors. It’s gone forever.”
Veterans must provide proof of a total and permanent disability through documents from the VA, the Social Security Administration or a physician. A three-year post discharge monitoring may apply and the obligation period to repay the loans may be reinstated for certain reasons, such as no longer being disabled, receiving new federal student loans, or having annual income above a certain amount.
The three year monitoring does not apply if your discharge is approved based on VA documentation. If a loan is discharged during the period of January 1st, 2018 to December 31st, 2025, the loan amount will not be considered income for federal tax purposes. The date of discharge will vary depending on how the disability was determined. In some instances, the discharge does not occur until after the three year monitoring period.
You probably have many questions about bankruptcy, including which type of bankruptcy will work best for you, how much you will have to sacrifice (very little in many cases), and whether you will have to go to court. Speak with a skilled bankruptcy attorney from the offices of H. Lehman Franklin, P.C. Call now to learn more at 912-764-9616, or contact us online.