Some Slight Consolation

[Mtngrl]

For people living in the US, there is some small consolation/compensation for having Stage IV cancer. First, having a terminal illness automatically qualifies you for Social Security Disability, if you've paid into Social Security for enough time, or SSI if you haven't. You don't have to prove you're "actually" disabled, but if you are, in fact, working, the benefit won't start until you quit your job.

Secondly, and I just learned this, you can get your student loans forgiven. From what I can see, that also applies to loans parents take out to help pay for their kids' education, called PLUS loans. This is good news for me. After helping five kids get through college, and borrowing most of the money to do that, I went back to school myself and partly financed it with student loans. I don't even want to tell you how much I owe now, with school for six people and 7 years of interest deferment.

All in all, I'd prefer to be cancer-free and be able to plan to have a normal lifespan. But I wasn't given that choice, and these things help.

[thinkpositive]

Amy,

Thanks for the info. I was aware of social security disability but didn't know anything about the student loans. A small consolation for sure, but a consolation none the less. Having been dealt the hand we have, we do the best we can and accept each and every consolation with gratitude.

Take care,
Brenda

[KDR]

Amy,
Plan for that normal lifespan. I am. And I don't think you are going to die.
Karen

[Lani]

I understand that if the loans are private rather than federal the loaning institution does not have to and generally does not forgive debt even in cases of death of the student.

http://abcnews.go.com/Business/student-loans-die/story?id=19460467

[Lauriesh]

This is so interesting to me, as I have 3 teenagers and the oldest will be graduating high school next year.
I couldn't find any programs that helped stage 4 cancer patients help pay for their kids college, but I wonder if we would qualify for the plus loans, if in the future we could get them forgiven?

Laurie

[Mtngrl]

Laurie,

My youngest graduated a few years ago, so I don't know what the current deal is with PLUS loans. The interest rate was rather high (especially compared to what banks pay.)

I wouldn't get them with the intention of getting them forgiven later. You should plan on paying them. I did, but life happened.

Lani--thanks for the clarification that what I said does not apply to all student loans. I oversimplified. It's just federally-insured student loans that we're talking about (and now that I re-read the materials, I'm not sure it applies to PLUS loans. I'll let you know.) Loans to which the forgiveness rules apply can be written off for permanent disability (or terminal illness). They can also very occasionally be discharged in bankruptcy, though unless and until there's significant reform that's pretty rare and extraordinary.

There are also various forbearance and extended repayment options.

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation

[Pat94]

As a college financial aid officer I know a little about federal student loans and checked with my college's loan officer to confirm.

Student federal loans do not have a co-signer and are cancelled at either death or total/permanent disability of the student. I understand in some community property states, a spouse might be responsible, that it depends on specific wording in those states; I have never worked in such a state so I really don't know anything about community property.

PLUS loans are federal ones for the parents of dependent, undergraduate children. Currently, there is no co-signer requirement for one. They can be cancelled by death or total, permanent disability of the parent or death of the child. I am not certain of the permanent, total disability allowances for the child.

If you have a student currently enrolled in college you should not request the disability discharge until your child graduates if you need one for subsequent years for that child or younger children. Once you are approved for the discharge you can not get another one without reinstating what was discharged.

Private loans are a whole different story. They definitely don't have the protections the federal ones offer. Be sure you carefully read the fine print before signing.

Some federal and state student loans are "repayable" by working in designated areas. If the student does what was promised then a certain part of the loan is cancelled.

Any cancellation or discharge of a loan, private, state, or federal is considered to be taxable income by the IRS and is charged a tax liability. If you can't pay the taxes owed the governments go after everything they can get including tax refunds (which you wouldn't have if you owed), social security retirement benefits or social security disability benefits. The IRS is not a forgiving agency! However, many people have worked with attorney's to get the IRS to consider a reduction in the amount owed. That is usually done when there are mega taxes owed but may not be done for normal(?) people like you and me.

If you have questions I can answer concerning college financial aid, you are welcome to contact me. Good luck with financing college at the same time those medical bills keep rolling in. Personally, I have given up on the idea of ever being able to retire if I want to continue paying my medical bills. On the other hand, I am so fortunate my employer worked with me and supported me through the bad times and that I have been able to return to work.

[Mtngrl]

Thank you so much, Pat!

A quick glance at the IRS site confirmed my recollection that you don't have to pay income tax on canceled debt if you were insolvent at the time. Ask your accountant or lawyer how to show insolvency. The general (law school) definition of insolvency is liabilities exceed assets and unable to pay debts as they come due. Note that there are certain exempt assets (things you could keep in bankruptcy, such as a cemetery plot) that don't have to be counted.

It also says, "certain qualified student loans" don't have to be included in gross income.

http://www.irs.gov/taxtopics/tc431.html

[Mtngrl]

I have an update on discharge of federally insured student loans:

The definition of "total and permanent disability" for the Department of Education loan forgiveness program is different from the one for Social Security Disability. For SSDI or SSI, having a terminal illness is a per se qualification. But for loan forgiveness, unless your notification from Social Security provides for review of your case every 5 to 7 years, qualifying for that does not meet their definition. My notice said they'd review in three years, not 5 to 7.

[v-ness]

hi - do you need to have quit your job to get your loans forgiven? my BF is still planning to return to work in the fall (he's a prof and advisor) in the advisor position. others will take over his class. where would i find out about the loan forgiveness? thank you!

ALSO, i work in financial aid (though not in loans), but i just helped a friend of mine whose brother is permanently disabled and still has an outstanding Sallie Mae (private) loan. i spoke to sallie mae and if you get proof of your disability with a doctor's letter indicating you will never be able to work again, they do indeed consider your request for forgiveness. sure, they are more hardass than the feds, but it also helps if you have proof that the fed loan was forgiven.

i am guessing that what you're talking about, fed loans being forgiven, means you can't be working?

i guess i could ask in my department...

[Mtngrl]

The criteria are spelled out on the website.

Also, the loans are discharged upon death of the borrower, meaning that, unlike some indebtedness, which is payable out of assets of the estate, federally insured student loans are personal to the borrower while s/he is alive.