Comments of Academics to Department of Education's RFI Regarding Evaluating Undue Hardship Claims in Adversary Actions Seeking Student Loan Discharge in Bankruptcy Proceedings (Docket No. Ed–2017–Ope–0085)

26 Pages Posted: 19 Jun 2018 Last revised: 8 Nov 2018

See all articles by Dalié Jiménez

Dalié Jiménez

University of California, Irvine School of Law; University of Connecticut School of Law; Harvard Law School - Center on the Legal Profession

Matthew A. Bruckner

Howard University School of Law

Pamela Foohey

Indiana University Maurer School of Law

Brook Gotberg

University of Missouri School of Law

Chrystin D. Ondersma

Rutgers University School of Law

Date Written: May 22, 2018

Abstract

This is a response to the Department of Education's request for information regarding evaluating undue hardship claims in adversary actions seeking student loan discharge in bankruptcy proceedings.

Although by law student loan borrowers may receive a discharge of their student loans when repayment would constitute an “undue hardship,” in practice many borrowers who would qualify for such a discharge in bankruptcy do not receive it. This proposal recommends changes to the Department of Education’s (the “Department”) policies and regulations that govern federal loan guarantors and loan servicers. The proposal would facilitate the appropriate discharge of student loans by establishing ten categories of borrower circumstances under which the Department would agree to the borrower’s discharge of federal student loans. The aim of the proposal is to establish clear, easy-to-verify, dire circumstances that merit the Department’s acquiescence to a student loan discharge and thereby promote the efficient use of taxpayer funds. Taxpayer funds should not be used to challenge a debtor’s discharge of her student loans where undue hardship is clearly present, or where the costs to fight a discharge are disproportionate to the likely recovery.

Keywords: Bankruptcy, Higher Education, Student Loans, Discharge, Department of Education, ED, Undue Hardship

Suggested Citation

Jiménez, Dalié and Bruckner, Matthew A. and Foohey, Pamela and Gotberg, Brook and Ondersma, Chrystin D., Comments of Academics to Department of Education's RFI Regarding Evaluating Undue Hardship Claims in Adversary Actions Seeking Student Loan Discharge in Bankruptcy Proceedings (Docket No. Ed–2017–Ope–0085) (May 22, 2018). Indiana Legal Studies Research Paper No. 404. Available at SSRN: https://ssrn.com/abstract=3183893 or http://dx.doi.org/10.2139/ssrn.3183893

Dalié Jiménez (Contact Author)

University of California, Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

HOME PAGE: http://www.law.uci.edu/faculty/full-time/jimenez/

University of Connecticut School of Law ( email )

65 Elizabeth Street
Hartford, CT 06105
United States
860-570-5114 (Phone)

HOME PAGE: http://www.dalie.org

Harvard Law School - Center on the Legal Profession ( email )

1585 Massachusetts Avenue
Wasserstein Hall, Suite 5018
Cambridge, MA 02138
United States

Matthew A. Bruckner

Howard University School of Law ( email )

2900 Van Ness Street, N.W.
Washington, DC 20008
United States

Pamela Foohey

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States
812-855-1257 (Phone)

Brook Gotberg

University of Missouri School of Law ( email )

Missouri Avenue & Conley Avenue
Columbia, MO 65211
United States

Chrystin D. Ondersma

Rutgers University School of Law ( email )

180 University Avenue
Newark, NJ 07102
United States

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