A New Bankruptcy Ruling Could Impact Your Private Student Loans

Kate Dore: “This week, a Colorado-based couple discharged $200,000 of private student loans in a bankruptcy case in the U.S. Court of Appeals for the Tenth Circuit. The appellate court said the couple’s loans—which were issued by loan giant Navient—didn’t meet the Tax Code’s definition of “qualified student loans.””

“The reason was that the cost wasn’t based on an “educational benefit” and didn’t cover the “cost of attendance” at their school. Therefore, the couple’s loans weren’t exempt from discharge in bankruptcy.”

The Wall Street Journal adds “the ruling has a broader import in that it will force courts to be more careful in deliberating whether or not certain student loans are dischargeable.”