Summary of Federal Laws                                                      

 

 

Financial Aid Programs

 

Bankruptcy Reform Act of 1978 and 1990 and 1998 Amendments              

Compliance Partners

Director of Student Accounts

Registrar

 

11 U.S.C. § 101 et seq.

 

Title 11 U.S.C. § 523(a)(8), along with the 1990 amendments, prohibits the discharge of most student loans in bankruptcy, when the loans were obtained from the government or non-profit higher educational institutions.  There is an exception for undue hardship and for loans that became due more seven years before the filing of the petition.  The seven-year exception was eliminated for cases commenced after October 1, 1998, the effective date of the Higher Education Amendments of 1998, and thus borrowers will not be able to discharge their debts to educational institutions under the seven-year exception.  An institution may be affected by the automatic stay (11 U.S.C. § 362(d)(1)), while the bankruptcy action is proceeding, and this prohibits the withholding of student transcripts to obtain payment.  This action is also prohibited if the debt is actually discharged.  For more on the issue of debt collection and student loans, go to the U.S. Department of Education Web site at http://www.ed.gov/offices/OSFAP/DCS/ that contains a guide to defaulted student loans.

 

 

 

 

 

 

 

 

 

Resources
Recent Developments in Student Bankruptcy Law: The Hood Decision and Beyond: Julia R. Hoke, for NACUA Annual Conference 2005 (password protected)

 

 

Links updated 2/25/08 RAB
links updated 6/12/08 rab

mlo updated 2/25/09 added NACUA resource and compliance partners

Checked compliance partner 05/13/2009 PK