I took out loans to pay for most of law school. Upon graduating law school it is common for students to take out what is called a "bar loan." A bar loan typically is $15,000 to get you from graduation, through the bar exam, and to the start of your first legal job.
From my reading of this portion of the Code and other related material, I would conclude that a bar loan IS dischargeable under Chapter 7 bankruptcy because the proceeds of such a loan are not paid to a qualified higher education expense.
Does anyone have anything thoughts on this?
My thinking is based upon this:
1. Section 523(a)(8)(B) of the Bankruptcy Code (as revised effective 10/17/05) excepts from discharge “any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986; incurred by a debtor who is an individual.”
2. Section 221(d)(1) of the Internal Revenue Service code defines “Qualified Education Loan” to mean “any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses. . .”
3. Section 221(d)(2) of the IRS Code defines “qualified higher education expenses” to mean “the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, 20 U.S.C. 108711) at an eligible education institution. . . .”
4. Section 108711 of the Higher Education Action of 1965, as amended (20 U.S.C. 108711) defines (in relevant part) the term “cost of attendance to include:
(1) tuition and fees normally assessed a student carrying the same academic workload as determined by the institution, and including costs for rental or purchase of any equipment, materials, or supplies required of all students in the same course of study;
(2) an allowance for books, supplies, transportation, and miscellaneous personal expenses, including a reasonable allowance for the documented rental or purchase of a personal computer, for a student attending the institution on at least a half-time basis, as determined by the institution . . .”
From my reading of this portion of the Code and other related material, I would conclude that a bar loan IS dischargeable under Chapter 7 bankruptcy because the proceeds of such a loan are not paid to a qualified higher education expense.
Does anyone have anything thoughts on this?
My thinking is based upon this:
1. Section 523(a)(8)(B) of the Bankruptcy Code (as revised effective 10/17/05) excepts from discharge “any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986; incurred by a debtor who is an individual.”
2. Section 221(d)(1) of the Internal Revenue Service code defines “Qualified Education Loan” to mean “any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses. . .”
3. Section 221(d)(2) of the IRS Code defines “qualified higher education expenses” to mean “the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, 20 U.S.C. 108711) at an eligible education institution. . . .”
4. Section 108711 of the Higher Education Action of 1965, as amended (20 U.S.C. 108711) defines (in relevant part) the term “cost of attendance to include:
(1) tuition and fees normally assessed a student carrying the same academic workload as determined by the institution, and including costs for rental or purchase of any equipment, materials, or supplies required of all students in the same course of study;
(2) an allowance for books, supplies, transportation, and miscellaneous personal expenses, including a reasonable allowance for the documented rental or purchase of a personal computer, for a student attending the institution on at least a half-time basis, as determined by the institution . . .”
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