“Though it is difficult to get your loans discharged through the bankruptcy process, an increasing number of borrowers are eligible to get their loans discharged that way,” she said. Shafroth, of the NCLC, says that new guidance on student loan bankruptcy has been coming out in recent years. She advises that borrowers make sure they are speaking to a bankruptcy attorney who understands student loan bankruptcy, which requires a different proceeding than other types of bankruptcy. “But they may not be successful at discharging their loans.”įor borrowers who show that level of financial strain, chances are they have other options, Rodriguez said. “That doesn’t mean people shouldn’t look into it,” Rodriguez said. Borrowers must prove a very hard standard of financial circumstances, called “undue hardship.” That means tough decisions for many borrowers, especially those in already-difficult financial situations.Įxperts say that delinquency and bankruptcy should be options of last resort, and that deferment and forbearance - which pause payments, though interest may continue to accrue - are often better in the short term.įor most student loan borrowers, it’s still very difficult to have your loans discharged, or canceled, through bankruptcy. But payments will resume regardless of what justices decide. Millions are also waiting to find out whether the Supreme Court will allow President Joe Biden’s student loan forgiveness plan to go ahead. More than 40 million Americans will have to start making federal student loan payments again at the end of the summer under the terms of a debt ceiling deal approved by Congress. It might seem tempting to just keep not making payments, but the consequences can be severe, including a hit to your credit score and exclusion from future aid and benefits. Student loan interest will start accruing on September 1 and payments are starting in October. NEW YORK (AP) - After three years, the pandemic-era freeze on student loan payments will end soon.
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