Are student fees owed directly to a school forgivable with bankruptcy? 4 Answers as of October 12, 2010

I read the previous advice that a dependent student declaring bankruptcy could probably not receive forgiveness for their student loans. However, what if they have no official student loans, but instead owe $30,000 directly to the university i.e. direct accounts receivable that has been sent to a collection agency. In this case, if the student filed bankruptcy could they be released from the $30,000, obtain access to their transcripts and make a fresh start with their education at a different university?

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Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
Educational loans are not dischargeable in bankruptcy unless excepting such debt from discharge "would impose an undue hardship on the debtor and the debtor's dependents" (from 11 U.S.C. Section 523 (a) (8). This includes loans and "any obligation to repay funds received as an educational benefit, scholarship or stipend."

I do not know how a judge would rule on your question. I suspect that this would be held to be a nondischargeable debt, but I could see arguments for both sides.

Restricting access to transcripts when the student has not paid fees owed is a policy at some schools.
Answer Applies to: California
Replied: 10/12/2010
Greifendorff Law Offices, PC
Greifendorff Law Offices, PC | Christine Wilton
Great question. It really depends on the nature of that debt. I suggest you take a copy of the original agreement you made with that school to your local bankruptcy attorney to review the document and make a determination as to whether that would constitute a student loan or unsecured debt. What I cannot understand is how a school would allow you to incur such a high account receivable. Has school gotten that expensive?
Answer Applies to: California
Replied: 10/12/2010
Diefer Law Group, P.C.
Diefer Law Group, P.C. | Abel Fernandez
No. Student loans are not dischargeable.
Answer Applies to: California
Replied: 10/11/2010
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
Yes, that should be dischargeable in a bankruptcy case.
Answer Applies to: California
Replied: 10/11/2010
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