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by | May 15, 2003 | Uncategorized

3rd Circuit Tightens Rules for Discharging Student Loans

In a ruling that promises to make it much more difficult for bankruptcy

debtors to win forgiveness of their student loans on “undue hardship”

grounds, the 3rd U.S. Circuit Court of Appeals has ruled that such debtors

must prove that they made good faith efforts to repay the loans over the

“entire” period from the first due date of the loans to the bankruptcy

filing date.

The court’s unpublished per curiam opinion in Pelliccia v. U.S. Department

of Education is a significant narrowing of the court’s 1995 decision that

established the undue hardship test, Pennsylvania Higher Education

Assistance Agency v. Faish.