Tag Archives: StudentLoans

Could I Lose My Student Loans for a Drug Conviction?

There are multiple consequences you could face if you are convicted of drug possession in Texas or other states. Depending on the nature of the charges and other factors, you could have a more difficult time securing employment or housing. You could face time in jail or prison. Many people may not be aware that you can also lose access to federal student loans or grants for a drug conviction. You can lose eligibility for federal student loans for drug crimes, such as intent to sell or possession. However, there is a catch to this rule. In order to lose eligibility, the crime must have been committed while you were still receiving federal student aid. A hypothetical scenario can explain this rule further. Let’s say, for instance, that you were arrested and charged with possession of marijuana in February, while you were enrolled in college courses and receiving federal student…
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Education Department Wants to Review Federal Student Loan Bankruptcy Rules

The Department of Education has said it wants to review how federal student loans are discharged in bankruptcy. Student loans are currently very difficult to discharge in bankruptcy due to the “undue hardship” requirement. Unlike other forms of debt in bankruptcy, you must first demonstrate that repaying your student loans would make you unable to maintain a minimal standard of living (undue hardship) to receive a discharge. However, Congress never determined what constitutes undue hardship, so it is up to courts to make this determination for each individual bankruptcy case. The Department of Education is seeking public comment on how undue hardship should be evaluated. Bankruptcy courts currently use one of two tests to determine undue hardship. Depending on the court, the Brunner test or the totality of circumstances test may be used. If the borrower successfully demonstrates undue hardship, the loans are discharged like other debts. There are a…
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Why is it Difficult to Discharge Student Loans in Bankruptcy?

Student loan debt in the US has grown to an astonishing $1.4 trillion dollars. While some people have an easy time making monthly payments on their student loans, others struggle or have defaulted. It is commonly believed it is impossible to file for bankruptcy on student loans. However, it is not impossible, just very difficult in many cases. You must prove repaying your loans would cause undue hardship. What is Undue Hardship? Bankruptcy courts may use one of several tests to determine whether a debtor meets the undue hardship requirement. The test used by the court could depend on where you file your case. Most courts are still using the Brunner test. Under this test, the courts would look at: Whether you could maintain a minimal standard of living for yourself of your dependents if you were forced to repay the loans. Whether the financial situation keeping you from maintaining…
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