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>The standard is nearly impossible to meet. Not really, the standard is "undue hardship". The problem is the myth...Of ~900,000 bankruptcy filings in 2014 onl

>The standard is nearly impossible to meet. Not really, the standard is "undue hardship". The problem is the myth...Of ~900,000 bankruptcy filings in 2014 only ~700 listed student loans as a debt to be discharged, of that number do you know how many were successfully discharged? The truth is of ~900,000 bankruptcies vastly more were eligible to have student loans discharged but didn't because they didn't even try. As a lawyer I have personally worked with a client to have a >$100,000 parent loan discharged directly with the US Dept of Education, and in no way would this client come close to being eligible for a normal bankruptcy.

otterley 11y ago
Did the lender contest? Was the bankruptcy actually adjudicated? Your client may well have just gotten lucky. The Brunner test is a tough one to pass.
- will_brown 11y ago
  Discharge through bankruptcy and discharge through the US Dept of Education are different reliefs. In bankruptcy, available statistics show educational loans are discharged, in whole/part, 50% of the time when attempted. My client's loan was discharged through the US Dept of Education. Unlike bankruptcy a lender can't contest, there is no adjudication because the matter does not go to court and a lawyer really isn't needed. It surely isn't luck. While most people falsely believe student loans can't be discharged in bankruptcy, even more don't even have any idea there is a separate process to discharge student loans directly through the US Dept of Education.
  - otterley 11y ago
    Does the DoE's ability to discharge student loan debts include private student loans, or only federally subsidized ones? My understanding is that the DoE has no legal interest in the former. Also, for many students, private loan obligations dwarf federal loan obligations. Also, under which criteria did your client receive loan forgiveness? Total/permanent disability? TPD will only apply to only a small fraction of borrowers; bankruptcy is much more difficult to attain a discharge under.
    - will_brown 11y ago
      As far as I am aware DoE can discharge any loans they originate (subsidized, subsidized and PLUS loans). Between sub and unsub that covers up to ~$18k/year, meanwhile only 1 in 10 student end up with over $40k total. PLUS loans are probably closer to private loans in obligation as parent loans can cover multiple children. In my client's case it was >$100k of parent PLUS loans, discharged under TPD. Statistics suggest TPD could apply to as many as 20% of borrowers. Again this number will only increase as baby boomers get older. I don't know if "small fraction" is a fair description or not of 20%, but that would still mean >$12B of parent plus loans alone are eligible for discharge under DoE TPD. One problem I experience first hand as a lawyer is potential clients who actually are eligible but they don't believe it. Worse they think it is some type of scam, because they believe it is impossible to discharge student loans. Something tells me if I discharged >$100k in student loans for a parent as a SV startup rather than in my capacity as a lawyer, I might be hailed as disrupting student loan debt rather than lucky.

otterley 11y ago

Did the lender contest? Was the bankruptcy actually adjudicated? Your client may well have just gotten lucky. The Brunner test is a tough one to pass.

will_brown 11y ago
Discharge through bankruptcy and discharge through the US Dept of Education are different reliefs. In bankruptcy, available statistics show educational loans are discharged, in whole/part, 50% of the time when attempted. My client's loan was discharged through the US Dept of Education. Unlike bankruptcy a lender can't contest, there is no adjudication because the matter does not go to court and a lawyer really isn't needed. It surely isn't luck. While most people falsely believe student loans can't be discharged in bankruptcy, even more don't even have any idea there is a separate process to discharge student loans directly through the US Dept of Education.
- otterley 11y ago
  Does the DoE's ability to discharge student loan debts include private student loans, or only federally subsidized ones? My understanding is that the DoE has no legal interest in the former. Also, for many students, private loan obligations dwarf federal loan obligations. Also, under which criteria did your client receive loan forgiveness? Total/permanent disability? TPD will only apply to only a small fraction of borrowers; bankruptcy is much more difficult to attain a discharge under.
  - will_brown 11y ago
    As far as I am aware DoE can discharge any loans they originate (subsidized, subsidized and PLUS loans). Between sub and unsub that covers up to ~$18k/year, meanwhile only 1 in 10 student end up with over $40k total. PLUS loans are probably closer to private loans in obligation as parent loans can cover multiple children. In my client's case it was >$100k of parent PLUS loans, discharged under TPD. Statistics suggest TPD could apply to as many as 20% of borrowers. Again this number will only increase as baby boomers get older. I don't know if "small fraction" is a fair description or not of 20%, but that would still mean >$12B of parent plus loans alone are eligible for discharge under DoE TPD. One problem I experience first hand as a lawyer is potential clients who actually are eligible but they don't believe it. Worse they think it is some type of scam, because they believe it is impossible to discharge student loans. Something tells me if I discharged >$100k in student loans for a parent as a SV startup rather than in my capacity as a lawyer, I might be hailed as disrupting student loan debt rather than lucky.