CHAPTER 6 SLAYING THE STUDENT LOAN MONSTER

• Jurisdiction: United States

CHAPTER 6 - SLAYING THE STUDENT LOAN MONSTER

Student loans are a hot topic at bankruptcy conferences, and for good reason. Chapter 6 focuses on this issue, which affects nearly 45 million Americans who collectively owe almost $1.6 trillion in student loan debt. Over the years, as student loan debt has increased, an individual's opportunity to discharge student loans has decreased. In some districts, courts are so strict on the standard for dischargeability of student loans that it may not even be worth the legal fees to try to have them discharged.

Despite the obvious need for relief from student loan debt, the majority of courts have adopted the strict "Brunner Test" for determining whether a debtor satisfies the requirements for a hardship discharge of her student loans. Two courts use a "totality of the circumstances" test to determine dischargeability. The number of people who are actually granted a discharge of their student loans does not even make a dent in the total amount of the debt.

Congress and the courts are exploring other options to manage student loan debt. Some courts have considered applying the...