Justice Department and Department of Education Announce a Fairer and More Accessible Bankruptcy Discharge Process for Student Loan Borrowers
WASHINGTON – The Department of Justice, in close coordination with the Department of Education, announced today a new process for handling cases in which individuals seek to discharge their federal student loans in bankruptcy. The new process will help ensure consistent treatment of the discharge of federal student loans, reduce the burden on borrowers of pursuing such proceedings and make it easier to identify cases where discharge is appropriate. The Associate Attorney General distributed guidance outlining the new process to all U.S. Attorneys. Congress has set a higher bar for discharging student loan debt compared to other debt — borrowers who seek to discharge their loans through bankruptcy must demonstrate that they will suffer “undue hardship” unless the debt is discharged. Although the bankruptcy judge makes the final decision whether to grant a discharge, the new process announced today provides Justice Department attorneys with clear stan...