SCOTUS to Examine Bankruptcy Discharge of Student Loans
By
Kevin Fayle
on June 15, 2009
| Last updated on March 21, 2019
There's been much discussion about student loans ever since the economy tanked. Many students leave school with debt payments they find impossible to
stay current on with their postgraduate salaries. This phenomenon only
increases in tough economic times as recent graduates take jobs they
are overqualified for, or are unable to find work altogether.
Some feel that the rising cost of higher education, and the consequent increase in the amount of student loan debt the average student is forced to shoulder, is an unfair burden for those seeking to enhance their education with a college or advanced degree.
Others argue that high levels of student loans are simply indicative of
the fundamental problems that have left consumers in such bad shape
during this downturn: Just as consumers overextended themselves by
buying too many luxury items on credit, students have exceeded their
means by choosing expensive institutions without regard for what their
prospects for future employment and repayment might look like.
The
student loan issue is a particularly personal one for attorneys. Law
school isn't cheap. Many attorneys go to law school expecting to land
a BigLaw position that will allow them to pay off their student loan
debt in a few years, only to find that avenue closed to them. This has
happened to more and more law students as BigLaw firms have begun
reducing their first year hires and laying off associates.
Wherever
you fall in the student loan debate, it should interest you to know
that the Supreme Court will take up student loan dispositions during
bankruptcy in its next term.
The case, United Student Aid
Funds, Inc. v. Espinosa, involves the question of whether a discharge
of student loan debt during a Chapter 13 bankruptcy proceeding requires
a showing of "undue hardship" and an adversarial proceeding.
The
debtor in the case sent a Chapter 13 plan to his student loan
provider. The creditor did not challenge the plan , but later tried to
recover the difference between the amount owed and the amount that the
debtor agreed to repay.
The district court found for the student loan provider, but the 9th Circuit overturned that decision on appeal.
See Also:
United Student Aid Funds, Inc. v. Espinosa (
9th Circuit)
Supreme Court takes student loan bankruptcy case (
JURIST)
Court to rule on student loan debts (
SCOTUSblog)
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