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Treasury places burden on the disabled with loans

Sometimes, systems are designed to be difficult. Consider most retail rebate programs. They require you send in various documentation, such as UPC labels and the correct form within a short time frame in order to receive the rebate payment. Most of this process is intentionally designed to be cumbersome and difficult, in an effort to cause many individuals to make mistakes, forget or simply abandon the process because it seems too difficult.

Programs like Social Security Disability sometimes seem to be set up on a similar plan. SSD benefits require a complex application, which is often denied on the first attempt, which then forces individuals to appeal their denial and may result in a hearing with an administrative law judge. Some can even work their way to federal court before the disabled worker is able to receive their benefits.

The process is complex and difficult to ensure that the benefits go to the truly disabled, prevent fraud or often due to the interaction of two or three government entities. For instance, a disabled worker with student loans should be able to have those loans discharged due to their desperate financial situation. The Department of Education has made an effort to make this easier for those individuals who have been designated by SSA as "Medical Improvement Not Expected."

Unfortunately, that loan forgiveness leads to taxable income, which for many individuals receiving SSD benefits means they could have those SSD benefits garnished. You can submit a form that will allow the loan forgiveness to receive tax-free treatment, but this is yet another set of complex documents that many disabled either do not know about or find overly complex to file.

The Treasury Department could issue guidance that could resolve this matter, but they appear to be waiting for Congress to act. There have been two bills introduced in the Senate, but they appear to be stuck in committee.

This is another area where unintended consequences of the interaction of different government agencies could be fixed by Congress, but it fails to act. The disabled are left to deal with this on their own. While this is frustrating as those rebate offers, the consequence is much more severe.

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