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Americans are flooding the government with appeals to have their student loans forgiven on the grounds that schools deceived them with false promises of a well-paying career — part of a growing protest against years of surging college costs, the Wall Street Journal reported today. In the past six months, more than 7,500 borrowers owing $164 million have applied to have their student debt expunged under an obscure federal law that had been applied only in three instances before last year. The law forgives debt for borrowers who prove their schools used illegal tactics to recruit them, such as by lying about their graduates’ earnings. The U.S. Education Department has already agreed to cancel nearly $28 million of that debt for 1,300 former students of Corinthian Colleges — the for-profit chain that liquidated in bankruptcy last year. The department has indicated that many more will likely get forgiveness. Read more. (Subscription required.) 

For further analysis of student loan debt and bankruptcy, be sure to pick up a copy of ABI’s Graduating with Debt: Student Loans under the Bankruptcy Code.

Mark Tetzlaff has spent three years battling lawyers for the Department of Education over the right to have his student loans canceled in bankruptcy. On Thursday, he appealed his case to the Supreme Court, and if the nation's highest court takes the case on, it will be one of the rare occasions when it has addressed the $1.3 trillion pile of student debt held by 41 million Americans, Bloomberg News reported yesterday. Douglas Hallward-Driemeier and his team, Tetzlaff’s legal counsel, have asked the court to clarify 1970s-era rules that prevent borrowers from getting rid of education debt in bankruptcy, except in cases in which repaying it would constitute an “undue hardship.” Lawmakers never fully defined "undue hardship," leaving it to the courts to define these special, and rare, circumstances in individual cases. Tetzlaff has said that the standard being applied to his case is unconstitutional. Read more. 

For more on student loans in bankruptcy, be sure to pick up a copy of ABI’s Graduating with Debt: Student Loans under the Bankruptcy Code. 

Hit with a big fine for violating a judge’s order, Michigan lawyer David W. Charron filed for bankruptcy protection to avoid paying it, the Wall Street Journal Bankruptcy Beat Blog reported on Friday. But a bankruptcy judge derailed that plan on Wednesday, ruling that Charron’s civil contempt fine of $363,506.77 — a penalty for orchestrating the sale of an insurance firm despite a court order not to do so — isn’t the type of debt that a person can get rid of using bankruptcy. In his 26-page ruling, Judge James Boyd said that Charron can’t cancel his debt to Glenn Morris, the former co-owner of insurance agency Morris, Schnoor & Gremel Inc.