Man seeks Supreme Court intervention to discharge student loans

| Nov 27, 2015 | Personal Bankruptcy |

Many people cannot attain degrees without taking out some loans. Students in New York often utilize federal student aid as well as private grants and loans when they need to pay for college, graduate school and professional school. The cost of getting an advanced degree can be steep, and unfortunately some new graduates discover that they are unable to pay off their educational debts in the job markets available to them after graduation.

This is the situation that one law school graduate found himself in. The graduate is now seeking the attention of the United States Supreme Court to have his matter considered. The man graduated from a low-ranking law school and was unable to pass the bar examination even after three tries. He had accumulated several hundreds of thousands of dollars in loans during the process of getting his law degree but was then unable to secure employment after leaving school. He would like to have his student loans discharged through personal bankruptcy, but the Court of Appeals hearing his matter stated that his situation did not demonstrate an undue hardship.

Several federal Courts of Appeals have considered this matter and have come to varying conclusions. Although there is no guarantee that the Supreme Court will take on this man’s case, the division among the lower courts does suggest that bankruptcy law regarding student loans is not as clear as it needs to be.

Many factors can influence the success a new graduate has with regard to paying off his student loans. Student loans are generally not dischargeable in bankruptcy unless the repayment of them would impose significant hardships on the debtor. It will be interesting to see if the Supreme Court offers its take on this matter and provides individuals with a clearer picture of what undue hardships can lead to the discharge of student loans.

Source: Bloomberg BNA, “Law Graduate Tries to Shed Debt in Bankruptcy,” Patrick Gregory, Nov. 23, 2015

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