Articles Posted in Student loans

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February Consumer Lunch

February 10, 2026

Zoom link

 

Attestation Process is Game Changer for Discharging Federal Student Loans

 

Christi Arkovich, Arkovich Law

Bob Branson, Branson Law

Tammy Branson, Branson Law

 

This CLE program explores the Department of Justice and Department of Education’s 2022 guidance that loosened the three-prong test for discharging student loans in bankruptcy through the new attestation process. Attendees will learn about how to analyze loan types and borrower eligibility, how to navigate the detailed attestation form, and borrowers who have successfully used the process. The program also covers how to file and handle these uniquely streamlined adversary proceedings—often resolved without litigation—key differences between bankruptcy schedule calculations and the attestation form, drafting consent final judgments, and practical considerations on fees, billing, and getting paid.

 

Consumer Lunches are no charge and via zoom.
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Christie_1Major student loan changes are coming July 1, 2026. New borrowers will only have two repayment options — Standard or the new Repayment Assistance Plan (RAP). All other income-driven repayment plans (IBR, PAYE, SAVE) are being eliminated for new loans.

The Grad PLUS program is also being eliminated, and Parent PLUS loans are getting capped at $20,000 per year.

Anyone with a Parent Plus loan now — must have consolidation completed before July 2026 in order to obtain an income driven plan.

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Christie_1The new Income Driven Plan (“IDR”) set to roll out next summer on July 1, 2026 is called the Repayment Assistance Plan (“RAP”) for federal student loans.

The administration’s goal is to eliminate the choices and complexity of the present federal student loan repayment system.  The old IBR, new IBR, ICR, PAYE and SAVE plans are all being terminated.  Those legacy plans will exist for three more years until July 1, 2028.  Thereafter, only those borrowers enrolled in non-RAP IDRs can remain in those plans.  It appears that forgiveness will only occur for those enrolled in IBR or RAP.  For instance, someone could remain in PAYE or ICR, but would need to switch to IBR or RAP for forgiveness.

What is RAP?  RAP is an income driven plan going into effect next summer based upon a borrower’s adjusted gross income (“AGI”).  It will offer a tiered payment plan:

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Christie_1Early October has many federal student loan borrowers receiving forgiveness emails for those whose backdoor trackers show 300+ qualifying payments, and enrollment in IBR.  This suggests that the Department of Education (“ED”) ran an internal audit and submitted the most straightforward cases first.  We anticipate more rounds of forgiveness emails in the future.  Getting to 300 payments and enrollment in IBR is key.

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Christie_1We have to wait for the SAVE litigation to learn if a new process allowing for Income Driven Repayment credit for all debtors in a Chapter 13 bankruptcy will go into effect.  It is presently enjoined as part of the SAVE litigation.  Rather than penalizing a debtor by simply placing the debtor into an administrative forbearance with capitalized interest, the new Bankruptcy IDR will give a debtor a month of credit toward loan forgiveness for each month the debtor makes a required plan payment under a confirmed Chapter 13 plan. 34 C.F.R. § 685.209(k)(4)(iv)(K).

This program would be particularly valuable for those borrowers with high income who also have large mortgage debt or medical expenses which can be used to reduce disposable income in a bankruptcy to reduce or even eliminate a student loan payment.  These types of expenses cannot be used to reduce an IDR payment outside of bankruptcy.

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arkovich_law-narrowDebt collection in the U.S. operates within a framework of consumer protections using the Fair Debt Collection Practices (“FDCPA”), the Fair Credit Reporting Act (“FCRA”) and the Unfair and Deceptive Trade Practices Act (“UDTPA”).  There are many more federal acts protecting against unlawfully high interest rates, fraudulent mortgage practices, deceptive banking practices etc.  Plus, many states have state based consumer protections acts — Florida calls theirs the Florida Consumer Collection Practices Act (“FCCPA”).

Bankruptcy protections such as the automatic stay, the right to a partial or full discharge also play a significant role to protect a consumer.  All of these laws don’t merely regulate behavior, they also define the boundaries of communication.  For instance, a U.S. consumer must be told who is collecting the debt, how much is owed, and how to dispute it.  Harassment or misrepresentation is strictly prohibited.  Private attorneys act as mini attorneys general in that if a consumer wins, that consumer can obtain his or her attorney’s fees from the debt collector.  That is what fuels a contingency case and tries to keep debt collectors honest.

How will an AI debt collector fit into this system?  Almost certainly, an AI agent would be required to not only disclose that it is a debt collector, but also that it is an artificial intelligence system per the FDCPA.  Not doing so, would likely be a false, deceptive or misleading representation which is prohibited by the FDCPA.

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Christie_1We believe that bankruptcy is becoming a major pathway to addressing student loan debt.  It offers a guardrail – and a penalty for those seeking debt relief; the borrower has to file bankruptcy.  Bankruptcy is outside the purview of ED requiring very little input from ED.  It is simple in that a borrower does not have to spend hours on hold with their loan servicer only to be hung up on, or told different answers.  A simple system run by an entity other than ED, apolitical, offering a guardrail and penalty for those seeking student loan debt relief fits the needs of a Trump administration.

Likewise, a borrower can benefit from having student loan debt addressed in bankruptcy.  It’s non-political.  You file an adversary action which ultimately results in a court order.  That court order offers certainty in very uncertain times.  There is no tax bomb for debt discharged in bankruptcy similar to that debt which is forgiven under the Public Service Loan Forgiveness program.  Partial or full discharge of debt, significantly lower interest rates and payments for private loans, protection of co-borrowers – these are avenues for relief that are either not available or highly questionable outside of bankruptcy.

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Christie_1We received a signed stipulation today on one of our Attestation adversary cases for a borrower making $4k a month who received a 95% reduction on $380k+ of federal student loan debt.  Now her payments are approximately $100 a month with a much more manageable loan balance of $15,600.  Blarcom v. U.S. Dep’t of Education.  While we couldn’t get rid of all of the debt, this set of loans is so much more manageable and best of all, the discharge is 100% tax free in bankruptcy. This client was working, not elderly, nor disabled.  But there was no chance she’d ever make a meaningful dent in this nearly $400k of debt.  I truly believe this will give her a new life and a new purpose.

95% off, and tax-free discharge/forgiveness.  I’ll take that deal pretty much any day of the week!

Case No. 3:23-ap-58-BAJ

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Christie_1PAYE is an income driven plan which allows for a 20 year term — but it’s expected to age out in 2028 due to the transition to RAP.  So if your count can get to 20 years before then, you should think about moving to PAYE (your loans would qualify if you did not have a loan prior to October 2007 and had a Direct loan after October 2011).  I know these loan dates will restrict many, but 20 years is far better than 30 years under RAP if your loans are eligible.  Please refer to our prior blogs about how to check your IDR count.

Some other news we’ve learned in the student loan world is:

  • If you qualify for private sector IDR forgiveness in 2025, you’ll have no tax consequences even if the forgiveness is processed in 2026
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Christie_1Certification of income is coming back into focus now for repayment of federal student loans.  What if you are self-employed and taking social security and don’t have a paystub?

You can self certify by sending a self-certification letter for income driven plans including:

    • Name,
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