Attorneys for a trade school alum in Arizona argued that a hardship hearing should not be required to discharge a student loan debt. Inclusion of the student loan debt in a bankruptcy plan - absent objection from the creditor - is sufficient for eliminating the debt, they argued.
Should the Court find in favor of the trade school alum, will this create a back-door path to financial aid? Possibly, but one would think student loan officers would start structuring loans in such a way that it would be difficult to discharge them in a bankruptcy filed straight out of college. However, resourceful college grads will definitely have to consider filing bankruptcy before collecting their first paycheck. While there are obviously consequences associated with declaring bankruptcy (credit freeze, credit score, employment issues, etc.), these could be significantly outweighed by the benefits of bankruptcy for a freshly-minted college grad. Absent the hardship hearing, a student could rack up serious debt and turn it into financial aid by declaring bankruptcy immediately after graduation.
USA Today story: http://www.usatoday.com/news/washington/judicial/2009-12-01-court-student-loans_N.htm
Perhaps it would be easier if the fallacy that one 'must attend college to succeed' was eliminated. College is definitely beneficial to a lot of people, but it is not for everyone. Ask Bill Gates.
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