STUDENT LOAN DISCHARGE

By Michaela M. White, Professor of Law, Creighton Law School

History

The Bankruptcy Code permits debtors to discharge prepetition debts and at one time, this discharge included student loans. Today, student loans are dischargeable in bankruptcy only in rare (and highly unfortunate) circumstances.

Congress made student loans nondischargeable in 1976, save for a narrow set of exceptions, in the belief that student-loan debtors systematically abused the bankruptcy system by filing bankruptcy shortly after graduation and seeking a discharge of student loans without a good faith attempt at repayment. At one time section 523 . . .

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