President Trump has signed an executive order calling for forgiveness of all student loan debt for any permanently disabled U.S. military veterans. The order charges the U.S. Dept. of Education and U.S. Dept. of Veteran’s Affairs to streamline the process to discharge federal student loans for disabled veterans who cannot maintain employment to repay their debts. The president signed the order following a speech at the American Veterans National Convention in Louisville, Ky.
This is not a new student loan forgiveness program for disabled veterans. Veterans who are totally and permanently disabled due to a service-related condition can currently have their federal student loan debt completely cancelled, tax-free, under the Total Permanent Disability (TPD) discharge program. However, complicated nature of the application and other factors have resulted in only about 20 percent of the eligible pool of veterans taking advantage of the program.
The new executive order calls for an “expedited” process for veterans to have their federal student loan debt discharged “with minimal burdens.” Under a new process, the Dept. of Education would automatically identify veterans eligible for loan forgiveness via the TPD discharge program, and give them the option to opt out for 60 days before discharging the debt automatically. It also clears eligible veterans from having to pay any federal income tax on the loans.
The debate over student loan forgiveness has grown more contentious as it has become a major focus ahead of the 2020 presidential election. Currently, Americans hold around $1.6 trillion in student loan debt. Consumer advocates have long called for the federal government to automatically discharge federal student loans for both Social Security disability benefit recipients and veterans certified as fully disabled. It is now up to the Dept. of Education and Dept. of Veteran’s Affairs to further streamline the TPD discharge process and implement the president’s order.