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Bankruptcy, Student Loan Discharge, and Permanent Disability

Can student loans be dismissed through bankruptcy?

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Justin Draeger
Spokesperson, National Association of Student Financial Aid Administrators
www.nasfaa.org  

Justin Draeger is Assistant Director for Communications with the National Association of Student Financial Aid Administrators (NASFAA). Prior to joining NASFAA, Justin worked as the lead analyst for the Michigan Guaranty Agency. Justin began his career in student aid 10 years ago working as the financial aid administrator for the Douglas J Aveda Institute in East Lansing, Michigan. Justin earned a Bachelor’s of Science Degree in Resource Management from Brigham Young University and his MBA in Finance from Baker College. He has presented at several conferences in both the financial aid and business management fields and continues to publish nationally. Justin has been tapped for his expertise on student financing by CNBC, Fox Business News, The New York Times, Wall Street Journal, Boston Globe, Kiplinger, Business Week, National Public Radio, and more.

Can student loans be dismissed through bankruptcy?

 

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Transcripts

Justin Draeger: I am Justin Draeger, spokesperson for The National Association of Students Financial Aid Administrators. Today I am going to be talking to you about bankruptcy, student loan discharge and total impermanent disability.

Host: Can student loans be dismissed through bankruptcy?

Justin Draeger: Generally, student loans can not be dismissed through bankruptcy. There was a time when it was easier for students who have their loans discharged where they are absolved from any responsibility if they were to declare bankruptcy. That is no longer in the case, only in very unique circumstances where student be able discharge or absolve themselves responsibilities on a federal student loan and that generally requires them going to court and showing that their loan, their student loan that is giving them an undue hardship.

By enlarge students who declare bankruptcy can receive some relief from having to make payments, through their bankruptcy arrangement or agreements to the court. But after they pull themselves out of bankruptcy, they will still be responsible for that student loan debt.

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