Swordsmyth
02-22-2018, 07:46 PM
The Trump administration is looking to clarify the rules which govern whether a person can discharge student loans in bankruptcy, according to a public notice (https://www.federalregister.gov/documents/2018/02/21/2018-03537/request-for-information-on-evaluating-undue-hardship-claims-in-adversary-actions-seeking-student) issued by the Department of Education. The agency is seeking input in order to determine "whether there is any need to modify" how bankruptcy claims are evaluated.
Under current law, student loans cannot be discharged unless a borrower has filed for bankruptcy and can prove an "undue hardship" which prevents repayment. Circumstances which constitute undue hardship have never been defined by congress, leaving it to bankruptcy judges to decide on a case by case basis - typically setting extremely the bar extremely high.
As a result, very few borrowers are allowed to expunge their debt.
Considering that nearly (https://www.zerohedge.com/news/2018-01-14/nearly-40-student-loan-borrowers-default-2023)40% (https://www.zerohedge.com/news/2018-01-14/nearly-40-student-loan-borrowers-default-2023) of student loan borrowers from the mid 2000's may default by 2023 according to Brookings (https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/), it's clear something is going to need to be done, especially since the alternative is a wholesale taxpayer bailout.
More at: https://www.zerohedge.com/news/2018-02-22/trump-admin-considering-student-loan-bankruptcy-options
Under current law, student loans cannot be discharged unless a borrower has filed for bankruptcy and can prove an "undue hardship" which prevents repayment. Circumstances which constitute undue hardship have never been defined by congress, leaving it to bankruptcy judges to decide on a case by case basis - typically setting extremely the bar extremely high.
As a result, very few borrowers are allowed to expunge their debt.
Considering that nearly (https://www.zerohedge.com/news/2018-01-14/nearly-40-student-loan-borrowers-default-2023)40% (https://www.zerohedge.com/news/2018-01-14/nearly-40-student-loan-borrowers-default-2023) of student loan borrowers from the mid 2000's may default by 2023 according to Brookings (https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/), it's clear something is going to need to be done, especially since the alternative is a wholesale taxpayer bailout.
More at: https://www.zerohedge.com/news/2018-02-22/trump-admin-considering-student-loan-bankruptcy-options