[Congressional Record Volume 162, Number 57 (Thursday, April 14, 2016)]
[Pages S2100-S2101]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


      By Mr. COONS (for himself, Mr. King, and Mr. Portman):
  S. 2800. A bill to amend the Internal Revenue Code of 1986 and the 
Higher Education Act of 1965 to provide an exclusion from income for 
student loan forgiveness for students who have died or become disabled; 
to the Committee on Finance.

  Mr. KING. Mr. President, I rise today to speak about a bill that I am 
introducing today, along with Senator Coons and Senator Portman, called 
the Stop Taxing Death and Disability Act. It is a bill that responds to 
a tragic and unintended and frankly unsupportable policy--an 
inadvertent policy, I believe--of our government. Senator Coons has 
been a great leader on this, and I also wish to express my appreciation 
to Senator Portman for joining.
  Not long after I was elected, I was contacted by Donald and Nora 
Brennen, a couple from Topsham, ME, which is just across the river from 
my hometown of Brunswick. They are both retired Navy veterans, and they 
experienced a tragedy in their lives that has inadvertently entangled 
them with the Internal Revenue Service in a way that I think makes no 

  Their son Keegan had graduated cum laude from the New Hampshire 
Institute of Art. He had taken on Federal and private loans in order to 
enable himself to get his education. He had a bright future. 
Unfortunately, barely 6 months after he graduated, he passed away 
suddenly from a non-traumatic brain aneurysm--a tragic loss which I 
think any of us as parents can only dimly appreciate or understand or 
empathize with. It is so unthinkable to lose a child in this way that 
it is just hard to conceive of.

  The Federal Government has recognized this kind of situation and 
forgives the student loan indebtedness of students who pass away in 
this situation. The Federal Government gets that part right. Congress 
has already directed the Department of Education to forgive outstanding 
balances for borrowers who pass away, as well as those funds borrowed 
by parents on behalf of a child who passes away. The same forgiveness 
provision, by the way, is also permitted for borrowers who suffer total 
and permanent disabilities that are certified by the Social Security 
Administration and the Department of Veterans Affairs. So far, so good.

  While the Federal Government solved that part of the problem, it 
inadvertently created another by recognizing that the Tax Code 
generally treats forgiven student debt as income in the year it is 
discharged. Because of this, this family in Maine who lost their son 
was suddenly--overnight--faced with a $24,000 tax bill and a $6,000 tax 
bill from the State of Maine because of its conformance with the 
Federal law.
  In other words, you lose a child. The loans are forgiven, but the 
forgiveness is treated as taxable income, and suddenly, in the midst of 
your grief, you are faced with paying an enormous--one big tax bill on 
the entire amount of the loan being forgiven.

  In this case, the Brennens couldn't possibly pay this in one 
instance, and it makes no sense from the point of view of policy. It is 
the opposite of compassion. It is literally adding insult to tragic 
  Since 2012 when they lost their son, the Brennens have struggled to 
make ends meet. They had to go into their 401(k). They had to make some 
kind of arrangement with the IRS, and now they are in the process of 
paying this enormous tax off.

  This family in Maine is not alone in facing this burden. My office 
has heard from other constituents in our State,

[[Page S2101]]

and our research indicates that there are at least several thousand 
across the country who are facing a tax bill in the midst of the most 
tragic and difficult circumstances. This just isn't right. It is 
something we should fix.
  As I said, the Department of Education does have it right, and they 
are working on this, but until this unresolved tax issue is resolved, 
they can't move forward with an efficient way to provide these 

  The bill we are introducing today with Senator Coons and Senator 
Portman, the Stop Taxing Death and Disability Act, is a commonsense, 
compassionate, and sensible response to this tragic event. If we are 
going to forgive the student loan debt, which makes total sense and has 
been the law for some time, to then turn around and say that loan 
forgiveness is itself taxable--so in the midst of your grief, you are 
presented with a massive tax bill--just isn't right. It is not fair, it 
is not right, it is not compassionate, and it isn't consistent with the 
earlier decision that has been made to discharge these loans under 
these tragic circumstances. I think it is time for Congress to add the 
death and disability exemption to the Tax Code.

  I thank Don and Nora Brennen for sharing this story with me--it can't 
be an easy story to share--and for their service to this country in the 
U.S. Navy and their commitment to doing the right thing for their 
  I hope and believe we can find it in our wisdom here and in our 
hearts to act on this bill to be sure that other families in America in 
the midst of their grief do not have to face this tragic situation.
  Again, I thank Senator Coons and Senator Portman for joining me in 
this bipartisan effort to right a wrong, to correct a mistake, to act 
in the best principles of this institution, to act on behalf of this 
small group but important group who suffered loss, to act to relieve 
this burden that should never have been in place in the first place.