Dive Brief:
- A Wisconsin man with more than $260,000 in student loan debt tried to appeal his case to get clarity from the U.S. Supreme Court on student loan erasure in bankruptcy proceedings.
- The New York Times reports that the court will not hear the appeal, leaving those filing for bankruptcy to prove “undue hardship” during proceedings to get out of student loans, but consumers advocates say the requirement is vague and interpreted too strictly by most bankruptcy judges.
- More than 80% of current student loan debt is either owed to the U.S. Department of Education or guaranteed by it, making any new lenience from the courts into a liability for taxpayers — something department officials have argued in past cases.
Dive Insight:
Student activists are beginning to target colleges and universities for the loans their students take out. Corinthian College students announced the first-ever student loan strike last spring, refusing to pay back the debt they owe for enrolling in the now-defunct for-profit college chain. When students cannot get relief from the courts or the federal government, they will have reason to turn to the institutions that charged them the high tuition in the first place.
This contributes to a tough environment for the higher education industry overall, which is struggling with state disinvestment and a Congress looking to tamp down on federal financial aid costs. The reauthorization of the Higher Education Act is expected to come with new accountability requirements for all schools, not just for-profits, which have faced severe scrutiny from the Obama Administration.