When you take out a student loan, you have visions of classes, labs, a bright future, and the dream job of your choice. Very rarely do you think of brain tumors, hospitalization, and death. It is also hard to imagine that taxes owed would become a concern of a grieving family. However, these are the things that happened to Andrew Wall’s family and many others.
After Andrew Wall graduated from college, he traveled to Hawaii to work on a farm. He wanted to have a summer off from obligations and he sunned and worked on an organic farm. He had plans to join the Peace Corps after this time on the farm in Hawaii. His ultimate goal was to become a teacher. At the times he was 22 years old and he had been awarded his English degree from Mount St. Mary’s University in Emmitsburg.
Andrew had used student loans to pay for his education. He was in good shape and had shown a love for hard work and been an excellent rugby player. However, he was in Hawaii for just a short time before he collapsed unexpectedly. He was diagnosed as having a brain tumor, and he died rather quickly after he had collapsed at the age of 23.
The Government and Student Loans
The United States government does have several discharge programs for those who fall ill or die such as the DTP program. The idea is that the family can mourn and not have to worry about the loan after the death or disability, and the loans will be forgiven. There are certain criteria to be met. However, federal taxes on the student loans are another matter to be considered and they are not forgiven at this time.
The Wall family was aware of this government plan, but they had not considered the IRS implications with a loan. Even though Eric’s student loan debts were at $75,000.00, they were not thinking about finances at this time. Then a few years after Andrew’s death, the tax bill arrived in the mail.
The Baltimore Sun said, “A bipartisan group of lawmakers is backing legislation to remove forgiven student loan debt from a co-signer’s gross income in cases of death or severe disability. Eric Wall works for Sen. Chris Coons of Delaware, one of the lead sponsors of the bill. But he learned of his own family’s struggles with the issue only after the legislation crossed his desk. “ Eric is the brother of Andrew, and through his work affiliations with student loans, he knew that the tax bill would arrive, and it did.
Additionally, the Baltimore Sun mentioned another recent case where the family was left to actually pay $27,000.00 in federal taxes on a student loan that their deceased son had been awarded. Nora Brennan, the mother of Keegan Brennen, said that the IRS representative actually suggested that she sell her deceased son’s possessions to satisfy the tax bill.
“I’m crying because I’m still grieving, and he’s quoting me the section we fall under in the tax code that’s the same as a farmer who forecloses on his farm — who can sell old tires, and tractors” to pay off the tax liability. He’s giving me a lesson in how this tax works, and I’m like, ‘You’re kidding me, right?'”
As family members like Eric Wall fight to change this policy on federal taxes and student loans, Nora Brennen still has to write a monthly paycheck for $ 435.00 to go towards clearing the federal tax bill for Keegan. The bill to end this action does seem to have a positive outlook.
Government representatives such as Republican Senator Bob Portman of Ohio help to voice the concerns. The proposed bill will remove all such debts from the co-signers gross income in the event of death or severe disability. Taxes owed would be a piece of what is forgiven, as well. As a member of the Senate Finance Committee, he feels relief will come soon, so that those who have lost a family member do not need to worry about an extra burden as they grieve.
Senator Bob Portman says this about the situation, “These families have been through enough already, and the last thing they need is a massive tax bill,” Portman said in a statement. “They did nothing wrong, and we have to fix this.”