Grieving family hit with unbelievable bill for ‘forgiven’ student loans after artist’s tragic death
Keegan Brennen was a talented artist who died of a brain aneurysm at the age of twenty-two. His $78,000 in federal student loans were forgiven upon his death.
But his grieving parents were cold-cocked by the news, however, that they now owe $33,000 in taxes, according to the Portland Press Herald.
The young artist had overcome obstacles on his way to graduating cum laude from the New Hampshire Institute of Art in May, 2012. He was born with a severe immunodeficiency — the kind that, in the past would have forced him to live inside a “bubble” — which required IV treatments until he outgrew the condition in his late teens. He had learning disabilities, for which he received help, that allowed him to earn As in the classroom.
Determined to be independent, he told his mother, “Mom, the only thing I want is to be able to take care of myself when I am older,” she told the Press Herald.
Six months after graduation, Keegan Brennen died, and his parents applied to have his $78,000 in student loan debt forgiven. The federal government allows for the cancellation of loan debt for people who die or become permanently disabled.
What the Brennens did not know is that “forgiven loan debt” is considered taxable income by both the state of Maine and by the federal government. The couple found that they owed $27,000 to the IRS, and $6,300 to the state, a bill that Keegan’s father called a “punch in the face.”
Senator Angus King (I-Maine) heard about the Brennens’ case, and has introduced legislation that would eliminate forgiven loan debt on the death of a child as taxable income. He characterized the current law as an “unintended and frankly unsupportable policy.”
There is no word yet on whether those who have already paid these back taxes will be entitled to retroactive refunds should the proposal pass into law.
“It makes no sense from the point of view of policy,” the Press Herald excerpted from King’s speech, when he introduced the bill on the floor of the Senate. “It is just the opposite of compassion. It is literally adding insult, in this case, to tragic injury.”