Mental Illness Can Serve as a Basis for Discharging Student Loans

Reynolds v. Pa. Higher Educ. Assistance Agency, 425 F.3d 526 (8th Cir. 2005)

Under federal bankruptcy law, an individual can be excused from repaying student loans if the debt "will impose an undue hardship on the debtor."  Ordinarily, the focus is on whether repaying the debt will not prevent a minimal standard of living after factoring in the individual's current and future financial resources and expenses.  The Eighth Circuit of the U.S. Court of Appeals ruled that the impact of the individual's mental health should also be taken into account when (1) the individual's mental health affects her past, current, and future earnings and (2) when the stress of the debt is likely to affect the individual's mental health adversely, causing an even greater decline in her earnings...

Found in DMHL Volume 25 Issue 2