I had written previously on the issue of potential changes to the student loan crisis and the potential for change in relaxing the strict rules to discharge student loans in bankruptcy. Both Public and Private student loans are currently nearly impossible to discharge in bankruptcy, due to a bankruptcy reform package pushed through by Republicans in 2005. Essentially, a consumer must be disabled to the point of never being able to rise above the poverty line standard of living in order to attempt to discharge any portion of a student loan debt, whether publicly or privately backed.

            The Supreme Court recently refused to hear a student loan appeal which had the potential to relax the bankruptcy requirements for forgiveness of student loans. So, for now, the strict requirements remain in place.

           However, it appears that many students have taken another approach to the problem. In this article:

 students have begun to challenge student loans with a 1994 Federal Law which allows for forgiveness of the loans based on fraudulent conduct by a school. The examples cited for fraud in the article include over promising on job prospects, earning potential and other problems which lead to high student loan debt with no reasonable job prospects to repay such loans.

           Our office has seen first hand the growing problem of student loan debt. Student loan debt has been growing tremendously over the past few years. The total outstanding student loan balance is $1.08 trillion, and a whopping 11.5% of it is 90+ days delinquent or in default. That’s the highest delinquency rate among all forms of debt and the only one that’s been on the rise consistently since 2003. (see for chart and other statistics). The delinquency rate on student loans is higher than credit cards, mortgages and auto loans which have all seen a decline in late payments.

            Our office has started a new program to apply for such forgiveness if the potential client can show that the school over-promised earnings, job prospects, education standards or other conduct which would make the loans fraudulent. Let us speak to you about applying for such a program and any other financial issue that you may have.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or


Bryan K. Mickler