Under current bankruptcy law it is really a hardship to plead and prove “hardship” necessary to get a discharge of student loans. Congress was not clear when they wrote the current law in 2004 and the courts have made the law even more difficult to apply since then. Therefore, if student loans are going to be dischargeable in the future, it will have to be because Congress explicitly changes the Bankruptcy Code to do so.
As with everything else Bankruptcy related, there are lots of sides to this story. Banks, the governments (state and federal) collection companies, Universities and Colleges, Debtors, Spouses, and private companies all have a dog in this fight. As with all things Bankruptcy, the underlying motivation for change is a strange brew of politics, economics and greed.
Whatever the eventual outcome, it is unlikely that student loans will become dischargeable freely in Bankruptcy anytime soon. Anyone contemplating higher education through borrowing should be very mindful of what this will mean to their future and not be unrealistic about their capacity to pay once they graduate and enter the workforce. Learning like a king, to live like a pauper, is not necessarily the path to happiness.
This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.