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ABI Law Review

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Bankruptcy law interacts with education law in a number of respects. A bankrupt educational institution loses access to student financial aid, and its accreditation status is excluded from the bankruptcy estate. Actions by accreditation agencies against bankrupt educational institutions are not subject to the automatic stay. And absent a showing of undue hardship, student loans are not dischargeable in bankruptcy.

The exceptional treatment of educational institutions and their students in bankruptcy reflects a fundamental tension between the goals of bankruptcy law on the one hand and education policy on the other. While bankruptcy law generally seeks to maximize value for creditors and afford a fresh start to individual debtors, it balances these objectives with the goals of education policy, which include assuring educational quality, access, and affordability, as well as protecting the investment of public funds in the educational sector.

Whether current law achieves the correct balance or ought to be rethought and reformed was the subject of a symposium that the American Bankruptcy Institute Law Review hosted at St. John's School of Law on October 24, 2014. The event brought together distinguished experts in the fields of bankruptcy and education law, and their contributions are published here in this symposium issue. These papers are especially timely in light of recent news events concerning high profile insolvencies in the higher education sector and pending legislation to reauthorize the Higher Education Act. And they will be of particular interest, given how little attention the intersection between these two subject areas has received until now.


Reprinted with permission of the American Bankruptcy Institute Law Review. Originally published at 23 AM. BANKR. INST. L. REV. 327 (2015).



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