U.S. Court of Appeals for the Second Circuit Rule on thursday Private student loans can be waived in case of bankruptcy.

The case involved a loan obtained by former Emerson College student Hilal K. Homaidan from Sallie Mae and the successor company Navient.

Navient insists that the “duty” part of the bankruptcy law is exempted[s] The repayment of funds received as educational benefits, scholarships or allowances” prevented the dissolution of the loan. The court held otherwise.

“According to Navient’s interpretation of the clause, the term’education benefits’ will cover almost all private student loans,” the court found. “But this interpretation cannot be coordinated with the text and structure of the clause,” the court held, “except for the exemption of a narrower debt category.”

Wall Street Journal Report This ruling is the third such ruling to open up part of private loans for repayment through bankruptcy.


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