The U.S. Supreme Court will hear an appeal that could impact the circumstances in which bankruptcy plans can require lower levels of repayment for student loans than federal law has traditionally allowed.  Much to the dismay of student and consumer advocacy organizations, current law makes it very difficult for bankruptcy to reduce the total amount owed on student loans.  In the case that the U.S. Supreme Court is now set to hear, three years after Francisco Espinosa’s bankruptcy was discharged, his lender, United Student Aid Funds (USAF) began intercepting Espinosa’s income tax payments to obtain $4,000 in interest on his original loan.  The dispute has been in the courts since.  Last year, the Ninth Circuit Court of Appeals ruled that USAF had sufficient notice that Espinosa would pay $13,250 instead of $17,832.15 and plenty of time to dispute the reduced payment.  Though USAF was informed of the opportunity to dispute the repayment amount, they did not. 

More from Inside Higher Ed on the Appeal
More from Inside Higher Ed on the Ninth Circuit’s Ruling