The new DOJ Guidance to discharge federal student loans in bankruptcy creates presumptions that the inability to repay a federal student loan will persist if:
- The debtor is 65 or older;
- The debtor has a disability or injury impacting income potential;
- The debtor has been unemployed for at last 5 of the last 10 years;
- The debtor failed to obtain degree for which loan was procured;
- The debtor’s loan has been in repayment status for 10 years.
Presumptions are rebuttable if there is concrete evidence that the debtor would have the future ability to pay.
Note the ten year time period – this could have easily been 20 or even 25 years. The fact that it is 10 only means ED wants to discharge these loans (if the debtor can show an inability to pay)! Many people may fit multiple categories, the more the better!