Several weeks ago, we wrote about how for-profit colleges contribute to high levels of student loan debt. Recently, the college we wrote about has closed its doors, and 16,000 students are now facing a choice to seek debt forgiveness.
Why are these students given the option to discharge student loan debt? There are ways to discharge student loans, and one way is the closed school discharge. Students who are enrolled in schools that close can discharge 100 percent of their loans if certain criteria are met.
If students at Corinthian Colleges discharged their student loans, they must walk away from the time and money spent on their education. This means the students will not be allowed to transfer the credits to another college. Furthermore, this situation only applies to students with federal student loan debt.
This is one of only a few ways to discharge student loan debt. There is another option that would allow student loan debtors to keep college credits and discharge some of their debt.
Can Student Loans Be Discharged Through Undue Hardship?
We have discussed the option of undue hardship discharges on our blog, and recently, court rulings have treated student loan debtors with leniency. It has become easier for individuals with student loan debt to show undue hardship, meaning an inability to maintain a minimal standard of living and being unable to pay the loan now or in the future.
In one case in 2013, the Eighth Circuit Court of Appeals allowed a student to discharge 15 private student loans totaling more than $118,000.
The Sader Law Firm – Kansas City Bankruptcy Attorneys