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  1. #1
    Join Date
    Feb 2009
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    1

    Default Dischargeable Student Loan

    My question involves bankruptcy in the state of: Georgia

    I received a Pell Grant, Federal Subsidized and Non-Subsidized Loans.

    In addition to this, I took out Private Student Loans from Sallie Mae.

    According to my research, a student loan is dischargeable in bankruptcy if it is NOT a qualified education loan, which mine does not appear to be because my private student loans were in excess of the cost of attendance according to my school:

    The Cost of Attendance (COA) for student aid purposes is an estimate of the total amount it will cost you to attend the University of Georgia for a year. It is based on whether or not you are a Georgia resident, your program of study and if you live on or off campus while attending the University. The COA initially assumes full-time enrollment and includes average tuition and fees, books and supplies, room, board, and living expenses. Financial aid Awards which include any State or Federal need-based assistance cannot exceed COA or Established Financial Need (EFN).

    The COA for UGA students enrolled solely in independent study courses only includes tuition, fees, books and supplies.

    Students with dependant care, computer or study abroad expenses should contact us to document allowable expenses which may serve to increase their COA. Students awarded Federal Direct Loan(s) will also have an average of the mandatory loan fees automatically added to their COA.

    Out-of-state students receiving full out-of-state tuition waivers are awarded using a Georgia Resident COA. Out-of-state students receiving 1/2 out-of-state tuition waivers are awarded using the non-resident COA with the monetary value of the 1/2 waiver added to their Award as a resource.

    Below are the average 2008-09 COA tables for First-Year Undergraduate and Graduate Students.
    UNDERGRADUATE (FALL 2008 & SPRING 2009)
    GA Resident On Campus GA Resident Off Campus
    Tuition/Fees 6,030 6,030
    Books/Supplies 900 900
    Room 4,238 -
    Board 3,290 -
    Living Expenses 2,300 9,000
    Total 16,758 15,930

    I was GA Resident Off Campus.

    I received $5500 in Federal Subsidized an 5,000 in Federal Unsubsidized Loans each year. Plus Pell Grants which totaled $4,500. This makes my need-based assistance equal $15,000-- Any loan in excess of $930 could not be considered a qualified education loan since it exceeds the Cost of Attendance--

    Is this correct?








    Goes on to say:
    If an education loan fails to satisfy any of these requirements, it is not considered a qualified education loan within the meaning of 11 USC 523(a)(8) and hence may be subject to discharge in a bankruptcy proceeding.


    11 USC 523(a)(8):
    Section 523. Exceptions to discharge:
    (B) any other educational loan that is a qualified education
    loan, as defined in section 221(d)(1)
    of the Internal
    Revenue Code of 1986, incurred by a debtor who is an
    individual;

    26 USC 221(d):
    Definitions
    For purposes of this section --
    (1) Qualified education loan
    The term "qualified education loan" means any indebtedness incurred
    by the taxpayer solely to pay qualified higher education expenses

    (2) Qualified higher education expenses
    The term "qualified higher education expenses" means the cost of attendance (as defined in section 472 of the Higher Education Act
    of 1965, 20 U.S.C. 1087ll, as in effect on the day before the date
    of the enactment of this Act) at an eligible educational institution,
    reduced by the sum of –

    Section 472 of the Higher Education Act of 1965 (20 USC 1087ll):
    Cost of attendance
    For the purpose of this subchapter and part C of subchapter I of chapter 34 of title 42, the term "cost of attendance" means --
    (1) tuition and fees normally assessed a student carrying the same academic workload as determined by the institution, and including costs for rental or purchase of any equipment, materials, or supplies required of all students in the same course of study;
    (2) an allowance for books, supplies, transportation, and miscellaneous personal expenses, including a reasonable allowance for the documented rental or purchase of a personal computer, for a student attending the institution on at least a half-time basis, as determined by the institution;
    (3) an allowance (as determined by the institution) for room and board costs incurred by the student which –
    (A) shall be an allowance determined by the institution for a student without dependents residing at home with parents;
    (B) for students without dependents residing in institutionally owned or operated housing, shall be a standard allowance determined by the institution based on the amount normally assessed most of its residents for room and board; and
    (C) for all other students shall be an allowance based on the expenses reasonably incurred by such students for room and board;
    (4) for less than half-time students (as determined by the institution) tuition and fees and an allowance for only books, supplies, and transportation (as determined by the institution) and dependent care expenses (in accordance with paragraph (8));

  2. #2
    Join Date
    Sep 2005
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    Default Re: Dischargeable Student Loan

    You declare bankruptcy.

    You attempt to discharge loans that you contend are dischargeable.

    The lender, if it chooses, opposes discharge.

    If that happens, the court decides who is right.
    Quote Quoting 11 USC Sec. 523(a)(8)
    (8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
    (A)
    (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

    (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
    (B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;
    You understand the significance of the word "or", right? What makes you think that your student loans don't fall under (A)(i)?

  3. #3

    Default Re: Dischargeable Student Loan

    Bankruptcy Basics A Publication of the Bankruptcy Judges Division in reference to a Chapter 13 discharge states that:

    "As a general rule, the discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328. Debts not discharged in chapter 13 include ... debts for most government funded or guaranteed educational loans...."

    By definition private loans are not publically funded or guaranteed. So (8)(A)(i) is not relevant to your question. However, (8)(A)(ii) may be broad enough to cover private loans, and needs further investigation.

    As to (8)(B) your analysis seems to be the most cogent I have found so far after hours of searching.

    Remember that, like Mr. Knowitall stated, it is up to the judge.

    Christy, have you found any authority on (8)(A) or (B)?

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