Non-Dischargeability in Bankruptcy

Student loans are nearly impossible to discharge in bankruptcy, a policy that traps millions in debt for decades. Federal data shows that only 0.1% of borrowers who attempt bankruptcy successfully discharge student loans, as courts require proof of undue hardship in an adversarial proceeding that most cannot afford. This standard is far harsher than the treatment of credit card debt or medical bills, which are routinely discharged. Compared to Misleading Gainful Employment Disclosures’s misleading disclosures, this practice has a more devastating long-term impact, costing borrowers an average of $37,000 in accrued interest and fees that would otherwise be eliminated.