A choice this month from the Bankruptcy Court in Manhattan (SDNY) may have a significant affect the marketplace for education loan securitizations. Education loan asset-backed securities (SLABS) are unsecured, but market individuals typically assume that the student that is underlying are not dischargeable in bankruptcy. A brand new ruling by the main judge of this SDNY’s Bankruptcy Court challenges this presumption.
In Rosenberg v. N.Y. State Degree Services Corp. (Jan. 7, 2020), Chief Judge Cecelia Morris discharged the student that is debtor’s and vigorously forced straight right back in the “myth” that it’s “impossible to discharge student education loans. ”