Prior to 1976, you could include student loan debt were dischargeable in bankruptcy. This is how it should be. After 1976, the lobbyists fought hard to change the law so that the only way you can discharge your student loan debt was to die! Yes, in a nutshell, that is the only way. The entire premise for bankruptcy is to give consumers a clean slate on outstanding debts and that should certainly include student loan debt.

 

What is and has always been included in bankruptcy is credit card debt. While I am not condoning this option, I am merely pointing out a potential loophole to a law this is clearly questionable. If you opened up enough credit card and had enough available credit, you could theoretically pay off your entire student loan debt with your credit cards. On the surface that may not be a smart idea, but it is possible? One could even make the argument that the interest on some credit cards is lower that the rate of some student loans. In addition, if you already consolidated student loans at a higher interest rate, you can’t refinance your student loan to take advantage of the very low rates right now.

 

So you have essentially transferred your student loans to credit cards and at some point down the road your unable to continue making your credit card payments, you could have all of your credit card debt excused in bankruptcy. I don’t want to argue if this is right or if it’s even legal, but I am pointing out that this may be your only loophole to get out from under the stress of a lifetime of student loan payments.