Every month, HESC’s “Question and Answer” Web feature includes an interesting question presented to the Office of Counsel and Regulatory Compliance staff.

This month’s winning question is as follows:

A defaulted Stafford loan was paid in full through a Direct Consolidation Loan. The borrower has included the consolidation loan in a bankruptcy petition. Is the borrower eligible to receive federal aid?

A borrower who includes a “non-defaulted” federal student loan in an active bankruptcy claim is eligible for aid if they have no loans in default.

Even though the borrower’s Stafford loan was in default status at one time, the default was cured through inclusion in the consolidation loan.


Direct questions regarding this guidance to the Office of Counsel and Regulatory Compliance at 518-473-3986, or toll-free at 1-866-431-HESC (1-866-431-4372), press 6, or via email at askpolicy@hesc.org