Student loan dischargeability

Changes in the Bankruptcy Code since 2005 have made student loans almost impossible to discharge in bankruptcy.  Given the explosion of student loan debt to the tune of almost a trillion dollars, the non-dischargeability of student loans has become a hot topic, especially where it is not uncommon for a college student to graduate with debt in the six figures.  In addition, many of those same students have no realistic chance of obtaining employment that offers a salary sufficient to both repay the loan and provide for the basic necessities of life (never mind saving for a home, etc.)  This has created an impossible situation for tens of thousands of young people saddled with student loan debt that realistically can never be repaid.

There are signs, however, that Bankruptcy Courts are willing to re-examine on a case by case basis the non-dischargeability of student loans.  Here in New Hampshire, the Bankruptcy Court has found in several cases that the  student loan debt  in question was dischargeable by applying a "hardship" test that weighed factors such as whether the student obtained the degree, good faith efforts of the student to repay the loan, and the likelihood that the student would ever earn a sufficient amount to repay the loan in full.  Accordingly, while student loan debt will (and perhaps should) remain difficult to discharge in bankruptcy, there are signs that the courts are beginning to take a second look at this issue.