Man Bites Dog -- A Student Loan Discharged

I've previously posted here, here, and here about student loans. A point that I made bears repeating: student loans are not dischargeable in bankruptcy. The rationale for this exclusion for the typical benefits of bankruptcy is straightforward. Student loans are, at least in part, undertaken as an investment to increase one's future earnings. Permitting their easy discharge would permit impecunious recent grads to have their cake and eat it, too. Immediately after having become fit to earn big bucks, they would file under Chapter 7 to escape liability to creditors while preserving their newly-minted earnings potential. Or so the theory goes.

Bankruptcy Code section 523(a)(8) permits one "out" for student loan debtors: "if excepting such debt from discharge would impose an undue hardship." But try to squeeze through that opening. Harder than getting a camel through the eye of a needle I'd have said.

But thanks to colleague Haskell Murray I can point to what burdened graduates can do to get that wished-for discharge: suffer from a serious form of Asperger Syndrome and be 63 years old. Check out the sad story here. One can only wonder about the schools who assisted this woman to get over $300,000 of student loans and the lenders who lent her that much. Goes to show that the backstop of government loan guarantees eliminates any gate-keeping function.