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The Nondischargeability of Student Loans in Personal Bankruptcy Proceedings: The Search for a Theory

36 Pages Posted: 6 Mar 2007  

John A. E. Pottow

University of Michigan Law School

Abstract

Student loans are not dischargeable in personal bankruptcy proceedings in the United States. Why is that so? The answer to that question has remained largely unexamined in bankruptcy scholarship to date. Doctrinal and empirical pieces have sprouted up here and there (some quite good), but theoretical treatment has been sparse. This article seeks to help fill that void. It assembles various defensible theories (some more defensible than others) under which student loans should be treated as nondischargeable debts. It then takes a comparative perspective by looking at how the laws in various jurisdictions square with these theories. The United States rates poorly; its laws tend toward implementation of the least defensible theories and only tangentially embrace the more compelling ones. By contrast, countries such as Australia and New Zealand, which take an income-contingent approach to student debt default, are on the right track.

Keywords: bankruptcy, nondischargeability, loan

JEL Classification: H81

Suggested Citation

Pottow, John A. E., The Nondischargeability of Student Loans in Personal Bankruptcy Proceedings: The Search for a Theory. U of Michigan Public Law Working Paper No. 75; U of Michigan Law & Economics, Olin Working Paper No. 07-005; Canadian Business Law Journal, Vol. 44, 2006. Available at SSRN: https://ssrn.com/abstract=967379

John A. E. Pottow (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-3736 (Phone)

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