Bankruptcy Options After Student Loan Cancellation Struck Down

The amount of money necessary to obtain a college education has been high for many years, and it has only continued to increase over the past three decades. Indeed, according to a recent article in Forbes, more than 50%of all college students now leave their institution with student loan debt, and Americans currently owe a total of about $1.75 trillion in both federal and private student loans. The average amount of debt per borrower is nearly $29,000, but the average loan balance in Illinois and a handful of other states is significantly higher. On average, debtors in Illinois currently have student loans over an average of more than $37,000. Now that the U.S. Supreme Court has struck down President Biden’s plan to cancel anywhere from $10,000 to $20,000 of student loan debt per borrower, many debtors are now considering other options.

Given that it may now be easier to have student loans discharged in bankruptcy, our Oak Park bankruptcy lawyers want to discuss your options. We can tell you more about the recent Supreme Court decision and can provide you with more information about having student loans discharged in a bankruptcy case.

Getting the Facts About the Supreme Court and Student Loan Cancellation

In Biden v. Nebraska (2023), the Supreme Court considered whether the Biden administration, through the Secretary of Education, had authority under Title IV of the Higher Education Act of 1965 and the HEROES Act to cancel student debt and whether one of the states involved in the case had standing to sue. The Court determined that at least Missouri (among other states that had sued) had standing and ultimately ruled that the Biden administration did not have the authority under existing law to cancel student debt. Here is the holding from the case:

“The HEROES Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal.”

Indeed, the Court made clear in its 6-3 decision that the “text of the HEROES Act does not authorize the Secretary's loan forgiveness program.”

Having Student Loans Discharged Through Bankruptcy

New guidance was issued in November that is designed to make it easier for debtors to show that they are eligible to have their student loans discharged in bankruptcy. What has changed?

To be clear, you will still need to meet the requirement of showing an “undue hardship” in order to have your loans discharged. Yet the process for showing that you meet the requirement is significantly less complicated, with the majority of the information contained in a 15-page attestation form. Our bankruptcy lawyers can explain in more detail, and we can discuss your specific financial circumstances and whether you are likely to meet the undue hardship requirement.

Contact an Oak Park Bankruptcy Lawyer Today

Do you have questions about having your student loans discharged through bankruptcy? In the wake of the Biden v. Nebraska decision, we know that many debtors with student loan balances will have inquiries and concerns, and our firm is here to help. An experienced Oak Park bankruptcy attorney can speak with you today about your options. Contact the Emerson Law Firm today for additional information.



See Related Blog Posts:

I Want to Have My Student Loans Discharged in Bankruptcy: Now What?

Top Things to Consider About Student Loans and Bankruptcy

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