Student Financial Aid News

From NASFAA:

“The U.S. Supreme Court is scheduled to hear arguments in a case this week that weighs federal rules for dismissing student debt in bankruptcy proceedings against the authority of a judge’s final court orders,” The Chronicle of Higher Education reports. “The case, United Student Aid Funds Inc. v. Espinosa, highlights the complex and sometimes contradictory nature of bankruptcy law that makes student loans as difficult to excuse as court-ordered child support. To dismiss student loans in bankruptcy, borrowers must show that repaying the loans would be an ‘undue hardship,’ a legal standard that has been applied inconsistently over time. Higher-education and legal experts do not expect the Supreme Court’s decision to broadly change how student loans are treated in most bankruptcies. Instead, the court is more likely to narrowly rule on the question of whether a final bankruptcy-court decision should stand if errors were made in the process.”

Commentary

What will also be of interest in this case is whether or not consumer protections are extended at all. Some legal experts believe the case will help broaden consumer protections that apply to other debts to student loans, while others say the case will have no bearing on expanding consumer protections. Stay tuned.

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