WEST CHESTER, Pa., March 14, 2017 /PRNewswire/ -- AccessLex Institute encourages enactment of S. 405, the Stop Taxing Death and Disability Act, which would exempt federal and private education loans that are discharged due to the death or total and permanent disability of a student from federal income tax liability. It also would allow the parent of a student who becomes totally and permanently disabled to have their federal loan discharged.
"The Stop Taxing Death and Disability Act is a common sense piece of legislation that would bring the tax code in line with the public policy of easing the financial hardship of borrowers and their families at a time of terrible grief and great stress," said Christopher P. Chapman, president and chief executive officer of AccessLex Institute. "AccessLex Institute wholly supports this bipartisan bill for its humanity and for the significant positive effect it will have on those impacted by it."
The federal government forgives certain federal student loans in the case of the death or disability of the borrower. However, the Internal Revenue Service currently treats the cancelled debt as income, which can result in tens of thousands of dollars in tax liability that generally accrues in a lump sum in the quarter in which the debt is cancelled. Introduced on February 16, 2017, by Senators Chris Coons (D-DE), Angus King (I-ME) and Rob Portman (R-OH), the Stop Taxing Death and Disability Act would eliminate this tax burden. Such a change in the law would, for tax purposes, treat these discharges on par with closed school discharges and forgiveness for public service employment, which are not taxed.
AccessLex Institute will continue to support this bill and other student-borrower friendly legislation, including those maintaining the Public Service Loan Forgiveness program and allowing for student loans to be discharged in bankruptcy.
About AccessLex Institute:
AccessLex Institute is a nonprofit organization committed to helping talented, purpose-driven students find their path from aspiring lawyer to fulfilled professional. In partnership with its nearly 200 Member law schools, improving access and positively influencing legal education have been at the heart of the Company's mission since 1983. AccessLex Institute has offices in West Chester, Pa., and Washington, D.C., with a team of accredited financial education counselors based throughout the United States. Learn more at AccessLex.org
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SOURCE AccessLex Institute