Student Loan Debt: Undue Hardship Assistance

Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2011/09/12 - Updated: 2023/11/29
Publication Type: Informative
Topic: Loans and Grants - Publications List

Page Content: Synopsis - Introduction - Main

Synopsis: Tips and assistance for those burdened with high loan repayments on student loan debts. According to bankruptcy law, student loan debt cannot be liquidated under Chapter 7 or consolidated under Chapter 13. Both require public and private student loan debt be paid in full, unlike their provisions for mortgages, credit card, and consumer.

Introduction

Student loan debt has significantly increased lately. Here are some tips for those who are burdened with high loan payments.

Focus

Few other groups have been hit harder by the recession than the nation's youth. The unemployment rate for America's young workers is much higher than the national average at 14.5 percent. More than half a million students have defaulted on their debt since 2008, and in August of last year, student loan debt surpassed credit card debt for the first time in our nation's history.

Some experts believe that student loan defaults may be the nation's next housing bubble. Student loans, like mortgages in the 1990's, are essentially available to anyone, and student loans have not followed the trend in mortgage and credit card loans, where qualifications have become more stringent.

Following commencement, graduates are faced with a tough job market that may require them to take on more temporary debt, like credit card debt, to make ends meet while they look for employment. Unfortunately, this can put recent grads in a tough financial position.

According to bankruptcy law, student loan debt cannot be liquidated under Chapter 7 or consolidated under Chapter 13. Both require public and private student loan debt be paid in full, unlike their provisions for mortgages, credit card, and consumer. However, there is an exception to this rule if one can qualify.

Undue Hardship

Individuals who can prove undue hardship may be able to wipe out their student loan debt. Common examples of undue hardship include poverty, permanent disability and good-faith efforts to repay the loan. Those interested must file a Complaint to Determine Dischargeability of a Debt with the bankruptcy court. Though there is no guarantee the court will grant the discharge, it is worth a shot. Otherwise, bankruptcy can still ease financial woes by consolidating a bankrupt's other debt, making other loan payments easier to make and leaving more funds for student loan repayment.

Moody's also lists some tips for those looking to avoid massive amounts of debt after graduation. It recommends putting limits on how much debt one takes on and explore other avenues for funding, like grants, scholarships and working during the high school years. Completing a degree within two or four years and pursuing a degree that is in high demand can also make payments smaller and easier to repay.

Taking on lots of student debt during a time when job security is essentially nonexistent is a precarious action, and getting it discharged through bankruptcy can be difficult. That said, bankruptcy, since it consolidates or discharges other debts, may make monthly student loan payments attainable.

Helpful Resources:

Author Credentials: Ian is an Australian-born writer, editor, and advocate who currently resides in Montreal, Canada. He is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.

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Citing and References

Founded in 2004, Disabled World (DW) is a leading resource on disabilities, assistive technologies, and accessibility, supporting the disability community. Learn more on our About Us page.

Cite This Page: Disabled World. (2011, September 12 - Last revised: 2023, November 29). Student Loan Debt: Undue Hardship Assistance. Disabled World (DW). Retrieved May 17, 2025 from www.disabled-world.com/disability/finance/undue-hardship.php

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