The Student Loan Bankruptcy Gap
IULIANO IN PRINTER FINAL (DO NOT DELETE) 11/16/2020 7:37 PM Duke Law Journal VOLUME 70 DECEMBER 2020 NUMBER 3 THE STUDENT LOAN BANKRUPTCY GAP JASON IULIANO† ABSTRACT Each year, a quarter of a million student loan debtors file for bankruptcy. Of those, fewer than three hundred discharge their educational debt. That is a success rate of just 0.1 percent. This chasm between success and failure is the titular “Student Loan Bankruptcy Gap,” and it is a phenomenon that is unprecedented in the law. Drawing upon an original dataset of nearly five hundred adversary proceedings, this Article examines three key facets of the Student Loan Bankruptcy Gap. First, it establishes the true breadth of the gap. Second, it explores why the gap has persisted for more than two decades and, in doing so, uncovers a creditor case-selection strategy designed to deter debtors from bringing legitimate claims. And third, it identifies solutions that have the potential to close the Student Loan Bankruptcy Gap and bring debt relief to millions of individuals. TABLE OF CONTENTS Introduction ............................................................................................ 498 I. The Student Loan Bankruptcy Framework .................................... 501 A. The Discharge Process ......................................................... 501 B. The Myth of Nondischargeability ....................................... 504 Copyright © 2020 Jason Iuliano. † Assistant Professor of Law, Villanova University. Ph.D. in Politics, Princeton University; J.D., Harvard Law School. Thanks to Laura Napoli Coordes, Seth Frotman, Jonah Gelbach, Melissa Jacoby, Ted Janger, John Pottow, Austin Smith, Madeleine Wanslee, Jay Westbrook, and the participants of the International Insolvency Institute’s Global Bankruptcy Workshop at Brooklyn Law School for valuable comments and discussions relating to this Article.
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