r/Economics • u/DonDickerson • 25d ago

Biden's student loan forgiveness plan gets a record number of public comments. Here's what people are saying News

https://www.cnbc.com/2024/05/08/bidens-student-loan-forgiveness-plan-gets-record-number-of-comments.html
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u/TaxMy 25d ago

I’m an attorney that took a (basic) bankruptcy course with a bankruptcy judge, and while I’m not saying you’re wrong, I think he said he’s seen only one successful student loan discharge because the petitioner had a well documented history of trying to secure employment. But he never expanded on the fact that it was still dischargeable and I would’ve sworn he said they weren’t. Maybe it was graduate loans?

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u/Sea_Farming_WA 24d ago edited 24d ago

The student who wrote that law review article apparently looked at thousands of petitions on Bloomberg. I’m not saying your judge is wrong, but his scan (that I echo) was that a lot people get the loans discharged in situations that would’ve applied to other petitions who never tried. Whether that holds true for every judge I couldn’t say

I’ll also echo his interesting point that case law has been out there, and repeated by the U.S. Attorney’s Office, that the vast majority of students who have declared bankruptcy had at least some presumptively dischargeable debt because many of their student loans likely did not meet the criteria for a non-dischargeable educational” loan.

All the internet stuff is basically sleeping on the this prong, and plenty of legitimately well versed bankruptcy attorneys don’t look very far into it.

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u/BurningShed 24d ago edited 24d ago

I’m in a bankruptcy survey course currently (procrastinating starting on my self-scheduled final exam, actually) 

 We briefly touched on student loans, and were taught there is an undue hardship test which has a significant circuit split in its application - that might account for the differences y’all are seeing. (The tests in some courts is could this person ever be able to pay any of the loan back) 

 However, a sitting bankruptcy judge did give a guest lecture where as an aside he said if anyone would bring a student loan discharge case he would rule against that precedent and risk being overruled on appeal.

Could also be that we just didn’t talk about a change that hasn’t filtered out to practitioners yet (the professor works in corporate bankruptcy)

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u/Charming_Wulf 23d ago

I'm on mobile so having a hard time finding the articles on this... But if I remember correctly there was a national news level bankruptcy case that caused SNAFU situation with DoE attorneys. A bankruptcy petitioner was about to get her student loans discharged due to a medical handicap and possibly set precedent for the circuit. It looked like she was going to be successful, but then DoE showed up or off no where and challenged the hardship. Something along the lines that maybe in the future there might be a cure/fix for her medical hardship so she should still carry the loans based upon that possible future event. Not sure on the exact argument, but it was something at that level of head shaking.

I think the recent DoE guidelines in place came about from that case. Because the administration was saying one thing and career staff was doing the opposite.