• Thu. Jun 23rd, 2022

The Trump administration’s promise of debt relief for disabled veterans has been delayed. Now the program resumes.

ByTina R. Wimmer

Mar 11, 2021
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In August, President Trump gave severely disabled veterans an automatic federal student loan forgiveness, freeing them from filing paperwork for a statutory benefit. But after an initial rollout, the program was put on hold due to the administration’s failure to execute the initiative properly.

The Ministry of Education said it processed 3,300 applications following the presidential decree, but had to stop two months later after learning that the regulations governing the program needed to be updated. . The department released the rule this week and received approval from the Office of Management and Budget late Thursday, allowing the agency to resume efforts Friday.

Trump administration automatically cancels student debt for lifelong disabled veterans

The bureaucratic misstep, first reported by Politico, cast a veil over an initiative the White House has heralded as a tremendous success.

At a Veterans Day ceremony at Arlington National Cemetery last week, Vice President Pence said: “With the stroke of a pen, the President has erased $750 million owed by more than 25 000 heroes.”

But so far only a small fraction of these veterans have had their education debt forgiven by order of the president.

Veterans have long been eligible to have their federal student loans canceled by the government if Veterans Affairs deems them totally and permanently disabled. But because the option was never widely publicized, few took advantage of the dump.

In December 2016, the Department of Education announced a partnership with VA to identify eligible veterans, who would then need to sign and return an application to complete the process. However, work on the project did not begin until April 2018.

Veterans groups said the initial response was lackluster. A Freedom of Information Act request by advocacy group Veterans Education Success found the Department of Education contacted more than 42,000 disabled veterans, but just 8,500 signed and returned the release request in May. 2018. The project had begun to progress by the time Trump announced his order in August, with 22,000 eligible veterans receiving more than $650 million in student loan relief.

Advocacy groups said the slow response from veterans may reflect concerns about the perceived tax implications of loan forgiveness. Until recently, the federal government treated money handed over through disability release as taxable income. The tax overhaul enacted last year ended the government counting as taxable income student debt canceled due to death or disability.

After the federal tax burden was lifted, state attorneys general and consumer advocates urged Education Secretary Betsy DeVos to automatically cancel debts accrued by disabled veterans — without the cumbersome process of filling out forms. The department said potential state and local tax liabilities related to the rebate remain of concern. Still, Trump went ahead.

“They made such a great sacrifice,” Trump said in a speech at the AMVETS National Convention in Louisville the day he announced the executive order. “The debt of these disabled veterans will be completely erased. It’s gone forever.