Justices Decline Case on Eliminating Student Loans in Bankruptcy

The U.S. Supreme Court turned down an appeal from a debtor who unsuccessfully tried to use her bankruptcy to eliminate a $70,000 in student loan debt owed to a state-created loan servicer.

Federal bankruptcy law makes it difficult for borrowers to use personal bankruptcy to discharge student loans owed to or insured by the government. Debtor Lorna Channer, who’s no longer in bankruptcy, challenged the lower courts’ determination that her loan guarantor, the Pennsylvania Higher Education Assistance Agency, counts as a “governmental unit” under bankruptcy law.

Channer’s student loan debt totaled about $52,000 when her bankruptcy ended. The debt had ...