2016 is ending on bad news about student loans and how they dragdown the financial well-being not just of students, but of theelderly.

In a coal-in-the-stocking move the week before Christmas, theTreasury Department declined to go along with congressionalDemocrats' quest for tax relief for impoverished, severely disabledstudents whose student debt is discharged — and thatcomes on top of a Government Accounting Office report that saysstudent debt is the road to poverty for many thousands of elderlyAmericans.

The Huffington Post reports the Treasury declined to issue“guidance” requested by several Democratic senators that would havespecified that those with student debt who are eligible for the“Total and Permanent Disability” loan discharge (a category ofborrowers with especially severe disabilities) would not risk anincome tax penalty.

Without that guidance, the report says, the discharged loancould end up counting as income subject to taxation, and that couldcost already-impoverished borrowers “a potentially significantsum.”

The report says, “Treasury officials discussed two alternativeapproaches that the Internal Revenue Service or Department ofEducation could enact, but failed to lay out a timeline or make acompelling case that the measures would be as effective as actionby Treasury.”

Borrowers qualify for the “Total and Permanent Disability” loandischarge if they are recipients of Social Security DisabilityInsurance or Supplemental Security Income benefits, and if theSocial Security Administration has given them the designation“medical improvement not expected,” meaning recovery is highlyunlikely.

In addition, they must not earn more than the federal povertylevel for a family of two, which in 2016 has been approximately$16,000 annually.

In a statement, Treasury spokesman Rob Runyan said of theagency's refusal, “The Obama Administration has repeatedly urgedCongress to enact legislative changes to address the possible taxconsequences of loan forgiveness faced by these borrowers, as wellas others with student loans. Congress has not yet enacted theselegislative changes. Treasury continues to work with the Departmentof Education to evaluate possible alternatives that could addressthe situations faced by these borrowers‎.”

However, Treasury did issue guidance this year on some kinds ofloan discharges for real estate investors and grantor trusts thatwould exempt them from taxable income.

Although student loans for handicapped and impoverishedborrowers are likely not to be found to be taxable income, thoseborrowers could face an automatic audit, expensive tax advisoryservices and substantial stress.

But wait, there's more bad news on student loan debt. In anotherreport, the Huffington Post says the GAO report on student loandebt found that “[m]ore than 110,000 senior citizens had theirSocial Security checks garnished in 2015 to pay off student loansthey'd already defaulted on. Nearly 70,000 Americans over the ageof 50 are living in poverty as their Social Security benefits arecut to pay off student loan debts.”

According to the report, 68 percent of older borrowers living inpoverty with Social Security garnishment are only seeing theirbenefit cuts devoted to interest and fees. As a result, theiroverall debt level is not falling, and without a new source ofincome it never will.

Incidentally, the federal government is actually making a profitout of this system, since every time a debt collector hits a SocialSecurity check it pays the U.S. Treasury Department $15.

Senator Elizabeth Warren, D-Mass., said in a statement, “Ourgovernment is shoving tens of thousands of seniors and people withdisabilities into poverty through garnishment every year andcharging them $15 every month for the privilege just so that theDepartment of Education can collect a little bit more interest andkeep boosting the government's student loan profits. This ispredatory and counterproductive.”