The Student Loan Bankruptcy Gap

Abstract

Each year, a quarter of a million student loan debtors file for bankruptcy. Of those, fewer than three hundred discharge their educational debt. That is a success rate of just 0.1 percent. This chasm between success and failure is the titular Student Loan Bankruptcy Gap, and it is a phenomenon that is unprecedented in the law.

Drawing upon an original dataset of nearly five hundred adversary proceedings, this Article examines three key facets of the Student Loan Bankruptcy Gap. First, it establishes the true breadth of the gap. Second, it explores why the gap has persisted for more than two decades and, in doing so, uncovers a creditor case-selection strategy designed to deter debtors from bringing legitimate claims. And third, it identifies solutions that have the potential to close the Student Loan Bankruptcy Gap and bring debt relief to millions of individuals.