Question about BK

[TomRaine]

I had to stop attending classes last semester due to work, and my university labeled it as an unofficial withdrawal, returning loans to my lender (Direct Loans). I called Direct Loans and they said now that the money was returned to them, it's a matter between the university and I.

The university is now asking for the amount returned as a refund and won't release my transcripts. Is the refund charge still considered a federal loan, or is it a personal charge from the university that can be erased by declaring bankruptcy? I have some other debt and I don't make enough money to clear this up, and I need to return to school this spring.

Thanks,

Tom.

[TomRaine]

Anyone know?

[tcreegan]

university owed

Hi Tom,

The good news is that Direct Loans has the $$ back you don't have a student loan due that can't be discharged.

The bad news is that the wording of the new BK law might leave the $$ owed to the Univ. non-dischargeable as well.

The good news is that this is still a somewhat grey area. Is the $$ you owe the Univ. a loan for educational purposes? Or is it a penalty for the unofficial withdrawl?

From my Univ experience, when someone withdrew they had to return all/some/none of the fin. aid. disbursed to them depending on how far you were into the semester. In turn, the Univ. would return all/some/none/ of the loans/grants to the issuing agency.

What the Univ. can charge you is spelled out in your enrollment documents. Somewhere they have a policy that governs what you can/can't be charged for the unofficial withdrawl.

Also, if you are at a large Univ. it is likely they have an ombudsman who can help you deal with the Univ. The O-Man can explain Univ. policy, give you options, and help facilitate a deal with the Univ.

Hope all this works out for you,

Tom in Colo
veteran of SBCC, NMSU, CSU

[Breathing]

I too had same question as OP as we have the exact same situation. We put them in the matrix and are hoping for the best. Thanks for insight on what we should expect Tom.