Because I have 30K+ in student loans and they're coming due, I have applied for a disability discharge. The problem with this is simple - it promotes my not looking for work, even though I'd much rather work. Due to the nature of my disability (Asperger's), my getting a job is not a guarantee to my ability to pay off the loans - I may get fired because I'm not a good fit with the company. Once I reach the maximum (15k I believe it is), during the 3 year post-discharge period, my loans all come crashing back, even if I can't find another job for years. That means what little I get via SSDI would be garnished, and I'd have to live under a bridge, or worse yet, with my parents. At 31 that would be more than humiliating, and to think it would be as a result of my "taking the risk" and trying to become financially independent from the government.
When it can be demonstrated that the person's only earnings are some form of disability insurance (private or SSDI), the person's student loans should be automatically frozen - meaning, NO interest accrues on them, AND no payments are due, no matter whether they are private, public, subsidized or unsubsidized. When the person attempts to be independent and obtains employment, during the employment of more than 2 months at significant income (above Y amount/month depending on the cost of treating the person's constellation of health conditions, where no matter what Y>2X monthly SGA) then the loans go back into repayment until the employment is lost. This allows the person to go back to work, but protects them from the predatory practices of the DOE. If after 10 years, the person hasn't been able to pay off Z% of the loan (say 20%), then the loan is discharged, and the discharged amount is not considered income.
The tax code MUST be changed in this regard. It is predatory for the government to say that loans discharged due to disability are a form of "income," that tax needs to be paid on.
The current law makes it 1) extremely difficult to get a disability discharge to begin with (who knew a psychologist specializing in adult autistic spectrum disorders with 20 years of experience, and a license to practice and diagnose people would be "unqualified" to comment on whether someone they diagnosed is disabled due to an adult autism spectrum disorder), 2) with this, the only option for the disabled would be income based repayment, under which the loans would balloon, especially with today's astronomical interest rates, 3) by the time the loan would be discharged under the IBR, it would be easily 3X the original amount, causing 4) the person to owe the same amount as originally when discharged, but in this case it would be to the IRS. This is a system of downright exploitation and abuse, and must be changed.
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