Debt Dodgeball

Student Loan Forgiveness

I will be graduating with a lot of student debt. Dare I ask if I can shed my student loans by declaring bankruptcy in New York?

Your question resonates with all students, so we want to tell you what the law allows.

If anyone tells you student loans can never be charged off, they are mistaken. It's a common misperception and you should probably obtain legal advice.

The US Bankruptcy Code states student loans cannot be discharged unless the debt poses “undue hardship”. Most assume they do not qualify for undue hardship. While it's a high bar, bankruptcy lawyers explain what is needed:

1) you cannot maintain a minimal standard of living, if you are forced to repay the student loans,

2) this situation is likely to persist, during the time of the loan repayment,

3) you made good faith effort to repay the loans.

Some people are allowed to file for bankruptcy and simply defer loan repayment until your case is completed. This can last 3 to 5 years. By that time, you will hopefully be earning enough money to handle the payments.

Besides bankruptcy, there are other options for students with federal loans. You can reschedule your payments later, when you are earning more money. Learn about these plans at the Federal Student Aid loan repayment website.

More help exists if you find employment, after graduation, with a non-profit or government agency. You're eligible for the Public Service Loan Forgiveness Program.

Bernie Sanders did promise free college tuition.

(John Regan is a former Director of Sales for equity research).

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