S 2049 — A bill to amend the Higher Education Act of 1965 to automatically discharge the loans of certain veteran borrowers, and for other purposes.

Summary

This bill requires the Department of Education (ED) to automatically discharge loans under the Federal Family Education Loan program for certain borrowers who are veterans of the U.S. Armed Forces. Specifically, ED must automatically discharge a veteran borrower's loan when the Department of Veterans Affairs has assigned the borrower a rating of total disability for a service-connected disability or has determined the borrower to be unemployable due to a service-connected condition, determine whether a state might impose a tax liability for the discharge of such a loan, and provide the borrower with a notification related to potential tax liability and an opportunity to opt out of such loan discharge.

Bill Text

• Introduced Introduced in Senate Current html June 28, 2019

Compared against current U.S. Code AI-generated reading aid — verify against the official bill.

The bill streamlines the process for discharging loans for certain veteran borrowers by making it automatic under specific conditions and adds provisions related to tax liabilities.

• 20 U.S.C. 1087(a)(2)

  A borrower who has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition and who provides documentation of such determination to the Secretary of Education, shall be considered permanently and totally disabled for the purpose of discharging such borrower’s loans under this subsection, and such borrower shall not be required to present additional documentation for purposes of this subsection. → (2) Disability determinations.--With respect to a borrower who has been identified under clause (i) or (ii) of paragraph (3)(A), the Secretary shall-- (A) consider such borrower permanently and totally disabled for the purpose of discharging the loans of such borrower under this subsection; (B) discharge the loans of such borrower under this subsection, without any further action by the borrower (except that this subparagraph shall not apply to a borrower who opts out of such discharge under subparagraph (C)); (C) in a case of a borrower who lives in a State that may impose a tax liability (as described in paragraph (4)) for such a loan discharge-- (i) notify the borrower of the possible tax liability; and (ii) provide an opportunity to opt-out of such loan discharge; and (D) notify such borrower of potential Federal tax implications of such loan discharge under this subsection.

  This change allows certain veteran borrowers to have their loans discharged automatically without needing to provide documentation, except in cases where they opt-out or may face tax liabilities.

• 20 U.S.C. 1087(a)

  (3) Matching program.-- (A) In general.--Not less than twice per year, the Secretary of Education and the Secretary of Veterans Affairs shall carry out a computer matching program under which the Secretary of Education identifies a borrower-- (i) who has been assigned a rating of total disability by the Secretary of Veterans Affairs for a service-connected disability (as defined in section 101 of title 38, United States Code); or (ii) who has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition. (B) Minor discrepancies.--With respect to each borrower who would have been identified under clause (i) or (ii) of subparagraph (A) but for a minor discrepancy between the information of the borrower maintained by the Secretary of Education and the Secretary of Veterans Affairs (such as a name discrepancy post marriage, a missing hyphen, a transposed number or letter, or other typo), the Secretary of Education and the Secretary of Veterans Affairs shall work together to correct such minor discrepancy of such borrower.

  This provision establishes a regular matching program between the Secretary of Education and the Secretary of Veterans Affairs to identify veteran borrowers eligible for loan discharge due to disability.

• 20 U.S.C. 1087(a)

  (4) State tax liability.--The Secretary shall determine whether a State may impose a tax liability for the discharge of a loan under this subsection, and in making that determination, the Secretary shall-- (A) in the case of a State which does not have an income tax, or which excludes discharge of student loans from its definition of income for tax purposes, determine that the State will not impose tax liability; (B) in the case of a State which conforms the relevant provisions of its tax law to section 108 of the Internal Revenue Code of 1986, determine that the State will not impose tax liability; and (C) in the case of a State which does not conform the relevant provisions of its tax law to section 108 of the Internal Revenue Code of 1986, consult with the tax authority of that State to determine if the State would seek to impose tax liability and, if not, determine that a State will not impose tax liability.

  This addition clarifies the process by which the Secretary determines potential state tax liabilities associated with the discharge of loans for veterans.

Action History

1. June 28, 2019

   Introduced in Senate

2. June 28, 2019

   Read twice and referred to the Committee on Health, Education, Labor, and Pensions. (Sponsor introductory remarks on measure: CR S4678)

Sponsors

• Jack Reed · Primary

Subjects