A Couple Of Important Tax Issues To Note
The IRS generally treats the amount of a discharged loan as income to you, meaning you’ll have to pay taxes on it unless you qualify for an exception or exclusion. But under the Tax Cuts and Jobs Act, if a student loan borrower becomes permanently disabled, the forgiven amount is excluded from taxable income for federal purposes. This exclusion is applicable after December 31, 2017, but will not apply to discharges after December 31, 2025, if Congress doesn’t renew it. Also, the American Rescue Plan Act exempts student debt forgiveness from federal taxation until January 1, 2026.
Some states might consider forgiven student loan debt as taxable income, even if the federal government doesn’t.
Definition Of Regularly Attending School
The number of hours you must attend to be eligible for the SEIE depends on where you are attending school. Social Security defines regularly attending school as being in class in a college or university at least eight hours weekly or in class in grades seven through twelve for at least twelve hours weekly, or in a home-school situation that meets home-school law for at least twelve hours weekly. It also defines regularly attending as attending a training course that prepares for employment at least twelve hours weekly or fifteen hours weekly if the course involves shop practice.
In some circumstances, a person may be attending for fewer hours and be eligible for the exclusion if the reasons for fewer hours are beyond the students control, such as being ill. A home-bound student may qualify if he or she is studying a course given by a school that offers grades seven through twelve, by a college, by a university, or by a government agency and a home visitor or tutor from the school directs the study or training.
What Can Cause Benefits To Stop
Two things can cause us to decide that you are no longer disabled and to stop your benefits:
if you work at a level we consider substantial.
In 2021, average earnings of $1,310 or more per month are usually considered substantial. The amount of earnings that we consider substantial changes each year.
- if we decide that your medical condition has improved to the point that you are no longer disabled.
Remember, you are responsible for promptly reporting any improvement in your condition, or if you return to work. The booklet we send you when your application is approved explains what you need to report to us. For more information on what else may cause your benefits to stop, refer to How We Decide if You Still Have a Qualifying Disability.
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Federal Grants And Benefits
The first step to applying for financial aid is to complete the Free Application for Federal Student Aid at www.fafsa.ed.gov. There are other websites that charge for this application, but you can fill it out on that site for free. The foundation of federal and nonfederal student financial aid is the Pell Grant. The maximum award for the 2018-19 year is $6,095. The Federal Supplemental Educational Opportunity Grant is for $100 to $4,000 per year and is available for Pell Grant recipients with extraordinary financial needs and will be awarded first to students with the lowest expected family contributions . Many children of disabled parents should qualify for this program. Children of Social Security Title 2 benefits may be eligible for auxiliary benefits. These provide up to 50 percent of the parent’s disability benefit per child. Children of disabled veterans may be eligible for Survivors and Dependents Assistance through the United States Department of Veteran Affairs. Eligibility requirements can be found on the VA’s website.
How A Pass Works
A PASS is a written description of how you are going to move toward getting a specific type of job or toward opening a certain type of business. You can use a PASS to newly qualify for SSI or to set aside money while getting SSI to receive a higher SSI payment to cover the income set aside for attaining your vocational goal.
Heres one example. You may have worked in construction all your life but can no longer do the required heavy lifting. You have always been interested in medicine and would like to become an x-ray tech. The x-ray-tech course takes a year and costs $3,000, plus $450 for books and fees, $75 for a license, and an estimated $300 for transportation to get to school. Your income consists of $400 a month Veterans Administration compensation and $403 SSI. You need all your income for daily living expenses.
Heres where a PASS comes in. If the Social Security Administration approves your PASS, you can set aside $380.00 of your VA benefit toward the $3,825 you need to cover your schooling costs and license. Your $20 remaining VA income will not count against your SSI payment because of the $20 general income exclusion. Your SSI benefit will then be the maximum Federal Amount of $783.00. With the $20 VA you did not set aside, you total income available for non-school needs would be $803, the same as it was before the PASS. And, you will be saving $380 a month toward your work goal!
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How Long Does Social Security Pay For The Children Of A Decedent
Very few students qualify for Social Security benefits after they are 18 and in college. These benefits are mostly reserved for students in elementary or secondary school whose father or mother has died. Social Security benefits for families affected by the death of a parent were established to help give the family a financial cushion after this tragic event. Once out of high school, most students no longer qualify for benefits, and those who do must be severely disabled.
Social Security benefits are not available for able-bodied college students. However, some disabled students may qualify for Social Security disability insurance or supplemental security income during their college years.
How Do They Qualify
Under SSDI, children in college are disqualified for SSDI benefits once they turn 18. However, if they are disabled before the age of 22, they can receive SSDI on their parents record. According to the SSA, “an adult disabled before age 22 may be eligible for child’s benefits if a parent is deceased or starts receiving retirement or disability benefits.”
Children also must meet the definitions of adult disability set by the Social Security Administration. The SSA determines whether the injuries, illnesses or other medical conditions are severe enough to warrant financial assistance based on five criteria: if you can work, how severe your condition is, and whether or not it is covered in a list of disabling conditions, if you can do the work you used to do and if you do any other type of work to support yourself.
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What If Theyre Receiving Benefits
Children can receive SSI benefits from their date of birth if they have qualifying disabilities. Once they reach 18, they are considered adults and have to qualify as adults. If children couldnt qualify for SSI benefits because their families resources exceeded the programs guidelines, they still might be able to qualify on their own. They have to meet the adult definition of disability as well as meet income guidelines.
Your Ssdi Benefits While In Jail
Its important that you understand what will happen to your SSDI benefits while in jail. You may lose them depending on the length of your incarceration. But, it shouldnt affect your family. Especially, if they depend on your benefits to live. Additionally, if you do lose your SSDI benefits because of criminal charges, know this can change.
Following your release, The SSA may reinstate your benefits without you having to reapply. Simply put its not worth attempting to trick the Social Security Administration by not notifying them youre in jail.
This is attorney advertising. SSDA, LLC is a group of attorneys that pursues claims for Social Security Disability benefits on behalf of its clients against the Social Security Administration. SSDA, LLC is in no way a part of the Social Security Administration. Further, the information on this blog is for general information purposes only. Nothing herein should be taken as legal advice. This information is not intended to create, and receipt or viewing does not constitute, a representative-client relationship.
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Acquiring A Disability After Graduation
When a student takes on loan obligations in order to attend school, its with the understanding that it will be paid back in full, often with interest. However, federal law provides certain situations where a students federal loans do not need to be paid back.>
If a student is declared to have a total and permanent disability , the student will not have to repay the following federal loans:
- William D. Ford Federal Direct Loan
- Federal Family Education Loan
- Federal Perkins Loan
Additionally, the service obligation for the Teacher Education Assistance for College and Higher Education Grant may be waived.
In order to have TPD loan forgiveness, the student must provide the necessary information to the US Department of Education, who will determine if the student is allowed a TPD loan discharge.
There are three ways a student can show TPD:
- 1The student is a veteran and provides documentation from the US Department of Veterans Affairs showing that the students cannot be employed as a result of a disability acquired during military service.
- 2Provide proof that the student is receiving Social Security Disability Insurance or Supplemental Security Income benefits.
- 3The student can submit medical documentation from a doctor who will certify that the student cannot obtain gainful employment due to a physical or mental impairment. The mental or physical impairment must be such that it can result in death, has lasted at least 60 months or is expected to last 60 months.
Applying For Disability Discharge
You should let Nelnet, the Department of Educations contractor, know that you want to apply.You can do this by phone or email. You can call seven days a week at 888-303-7818 or email at . You can also let Nelnet know you are applying by using the online disability discharge application. You can designate a representative to apply on your behalf. You must fill out the representation designation form available in English and Spanish on the Departments disability discharge web site.
Once you let Nelnet know you are applying, they are supposed to do the following:
1. Provide you with information you need to apply for a discharge if you do not already have it.
2. Identify your federal student loans and/or TEACH Grant service obligation that may qualify for a discharge.
3. Contact your loan holders and instruct them to suspend collection activity on your loans for a period of up to 120 days. This means that during the 120 day period, you will not be required to make payments on your loans. This gives you time to complete the discharge application, but collection will start up again if you do not submit an application within the 120 day period. The Department says that the suspension of collection does not include administrative wage garnishment or Treasury offsets. The Department or guaranty agencies for FFEL loans may, however, stop or reduce offsets during this period.
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Scholarships For Children Who Have Older Parents
If your child is headed off to college soon, scholarships are probably on the top of your mind. If you’re disabled, you may not realize that there are many scholarship and grant options available for children of disabled parents. With so many government grants based on need or income, it is crucial to look for scholarships that are offered by businesses, nonprofit organizations and individuals.
What Is The Difference Between Ssi And Ssdi
SSI eligibility is determined based on age, disability and available resources, while SSDI is based on a persons disability and work credits.
For most people, medical requirements that will allow you to receive disability payments are the same for both, and disability is determined using the same process. Both SSI and SSDI are managed by the Social Security Administration as well.
Location and monthly income
Record of earnings
The most notable difference between SSI and SSDI is that SSDI is only available to people who have accumulated enough work credits, while SSI is available to low-income individuals who have not accumulated enough work credits or who have never worked. In addition, SSDI is based on your work history, but SSI is strictly based on a financial situation of considerable need.
Additionally, SSI benefits begin on the first of the month that a social security disability application is submitted and approved, but for SSDI there is a five-month waiting period. People who qualify for SSI can also receive Medicaid benefits. After receiving SSDI benefits for two years, a disabled person will be eligible for Medicare benefits. The amount of SSI benefits depend on where a person lives and what their monthly income is, while SSDI benefit amounts are dependent on a persons earnings record.
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Title Iv And Bia Educational Assistance
The SSA will exclude all financial aid that you get from either Title IV Higher Education Act or BIA assistance when it calculates your income and resources. There is no time limit for how long the SSA will exclude the assistance, no matter how long you keep the funds.
Here are examples of qualifying Title IV HEA or BIA assistance programs:
- Pell grants
- Gear Up
- LEAP .
- SLEAP , and
- Work-Study Programs.
Federal Student Aid Programs
When a student prepares for college, one of the most important first steps is to look for federal student aid. This will be available to all students, including those who attend online colleges and those with a recognized disability. Federal financial aid programs can be divided into two types: awards that need to be paid back and those that do not.
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Disability Discharge Tips And Faqs
Q: Is it possible to work and still be eligible for a disability discharge?A:Even though the government may say otherwise, the answer should be yes. You are allowed to earn less than 100% of the poverty line for a family of two during the three year watch period after a final discharge is granted. This allows you to explore whether you can get back in the workforce.
Q. Can I qualify if I have a disability that prevents me from working in the occupation for which I was trained?A: Not if you are able to work in a different occupation. To be eligible, your disability must make you unable to engage in any type of substantial gainful activity.
Q: Is evidence of a Social Security or Veterans Affairs disability decision sufficient to qualify for a student loan discharge?A: For V.A., yes, if you have been determined to be unemployable due to a service-connected condition. For Social Security, in some cases, yes as of July 1, 2013. If you are receiving Social Security Disability Insurance or Supplemental Security Income benefits, you can submit a Social Security Administration notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination as a way of proving eligibility for a disability discharge. You may do this instead of submitting a certification from your doctor.
Q: Can I apply again if I was denied the first time?
1. Pay stubs showing year-to-date income,
General Scholarships And Awards
Scholarships and awards provide monetary gifts based on a student’s achievements, interests, background, or other criteria. A good first step in your scholarship search is to check with your parents’ employers, local organizations, your high school guidance counselor, your college or university’s financial aid office, the department chairman at your chosen school, and your college or the local library. Below you’ll find other resources and tips that may help you locate financial aid.
Employers. Parents can check with personnel administrators to see if their employers offer financial aid, tuition reimbursement, or scholarships for employees’ children. If you are employed or volunteering, ask your company if they offer scholarships.
Organizations. Many professional or social organizations offer scholarships. The Elks Club, for example, offers millions of dollars each year in scholarships for graduating high school students. Some labor unions offer scholarships for members and their dependent children. If you are not a member of an organization, check with organizations that are related to your chosen field of study. For example, if you plan to study aeronautical engineering, check with the American Institute of Aeronautics and Astronautics regarding college scholarships they offer.
Religious Groups. Your church, mosque, synagogue or temple may have scholarships available. Also check with the headquarters of your religious affiliation.
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If You Have Been Denied Disability You May Still Qualify For Benefits Contact An Experienced Social Security Disability Attorney At 512
If you do become disabled and need your LTD benefits, your insurer will usually ask you to apply for Social Security Disability Insurance benefits as well.
LTD insurers can financially benefit from your Social Security disability claim. This is because most LTD policies contain language giving the LTD carrier the right to reduce monthly LTD insurance benefits by the amount you receive in Social Security disability payments. This is called an offset. Not only will the LTD carrier seek to reduce/offset their future monthly payments by the amount of the Social Security disability benefit, the LTD carrier will claim they are entitled to any back benefits paid by Social Security for any prior period of time you were being paid LTD insurance benefits.
A common practice of LTD carriers is to convince you to pay the LTD carrier all of your SS disability back benefits and then within a month or two of receiving your back benefits sending you a letter denying your future LTD benefits on the grounds that you are no longer disabled. Dont be denied, get help. Call social security disability lawyer Lloyd Bemis at 512-454-4000
For example, lets assume that you have an LTD insurance policy that pays you 60% of your annual earnings of $40,000 per year.
This raises the obvious question as to why should you even bother to seek Social Security disability benefits.
There are several compelling reasons why you should seek SS disability benefits in this scenario: