First, the information which follows applies to federal direct or federally guaranteed student loans. Effective January 1, 2018, amounts cancelled due to death or disability will not be considered income for federal income tax purposes. This removes one of the largest stumbling blocks for persons who otherwise would qualify for and benefit from debt cancellation.
Federal PLUS loans, the only loans typically requiring a parent to sign as borrower, may be discharged upon the death or disability of either the parent borrower (both parents must be deceased IF both signed the note) or the student.
