Is Your Student Loan Debt Dischargeable? Student Loan Forgiveness

Student Loan Forgiveness

This is the question every college, vocational, masters program, state college, or other grad asks at some point when they look at the balance on their student loan debt: Is your student loan debt dischargeable? And, is student loan forgiveness available.

Chances are, the answer is “No.” If you received a loan from someone that paid directly to an educational institution, you have a most likely non-dischargeable student loan debt. Several amendments and changes to the Bankruptcy Code (Title 11 U.S. Code) have made discharging your education debt nearly impossible.

The Bankruptcy Amendments and Federal Judgeship Act of 1984 made private student loans from all nonprofit lenders excepted from discharge, not just colleges, by striking the words “of higher education”. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 expanded this to include all “qualified education loans”, regardless of whether a nonprofit institution was involved in making the loans. This includes your best friend and mine, Sallie Mae.

However, the applicable Bankruptcy Code section and the corresponding Internal Revenue Code section discuss “indebtedness” and “educational loans,” of which we contend unpaid tuition represents neither. Tuition debts are contractual obligations and are not student loans unless they are supported by a promissory note.

Student Loan Forgiveness Cases

Two relevant cases that discuss this in matter in detail are: In re Kevin Renshaw and In re David Regner, 222 F3d 82 (US Court of Appeals for the Second Circuit, 2000) and In Re: Sandra Ann Chambers, 348 F3d 650 (US Court of Appeals for the Seventh Circuit, 2003), where the court held that unpaid tuition bills were not an education loan and hence could be discharged.

If you find that you owe unpaid tuition, you may be able to find relief under bankruptcy law.

Contact a Utah Bankruptcy Attorney

To find out more about student loan forgiveness and whether your unpaid tuition or student loans are dischargeable, contact a Utah bankruptcy attorney at the law office of Pearson Butler at (800) 265-2314.

We are a debt relief company under the bankruptcy code. We help people file for bankruptcy.