Dear Steve,
I have both private and federal student loans. My private loans make up about 3/4 of my student loan debt which is around $36k. I fell for the whole, "wait until you graduate to deal with your loans" advice my school and others gave me. I definitely regret that now!!
I saw in an article today that you wrote that if your student loan debt is more then the cost of your education it can be discharged. Can you explain that to me in greater detail? My school costs around $6000 a year but it took me longer than 4 years to graduate. But even then, my loans equal way more than my education actually cost.Thanks in advance for any advice you can give me!
Alicia
Dear Alicia,
Ah yes. The key information you need to know is if the loans were used for "qualified higher education expenses."
If not, then that amount not used for such expenses is not protected in bankruptcy.
(A) In general
The term "qualified higher education expenses" means--
- (i) tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary at an eligible educational institution;
- (i) In general In the case of an individual who is an eligible student (as defined in section 25A (b)(3)) for any academic period, such term shall also include reasonable costs for such period (as determined under the qualified tuition program) incurred by the designated beneficiary for room and board while attending such institution. For purposes of subsection (b)(6), a designated beneficiary shall be treated as meeting the requirements of this clause.
- (i) shall not exceed--
Here is where that information came from.
So as an example, if you attended a qualified educational institution but were not at least half-time it appears an argument could be made to discharge room and board expenses. Or if you used part of your student loan for living expenses outside of room and board, those may be be eligible for discharge as well.
For more information on this, read this article and scroll about halfway down the page.
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