Breakthrough discovery published in Personal Finance Digest (http://www.pfdigest.com/). HOW TO DEFAULT ON STUDENT LOANS: It was a long struggle, but in Oregon, somebody figured out how to beat the system: The financial advice gets repeated as a mantra: Student loans are the one form of debt that can’t be forgiven, even in bankruptcy. But a Klamath Falls man has proven that’s not always true. Mike Hedlund waged a 10-year legal battle to force his lender to discharge most of the $85,000 in federal student loans he built up while earning his 1997 law degree from Willamette University in Salem. He argued that, even when working full-time and living frugally, he could not repay that much money and also maintain a minimal standard of living for himself and his family. Last week, in a decision that could affect debtors in eight states, a panel of the Ninth Circuit Court of Appeals in Pasadena, Calif., ruled in Hedlund’s favor. It upheld a bankruptcy judge’s ruling that Hedlund proved all three factors necessary to have $53,000 of his debt forgiven: He made a good faith effort to repay the money; he can’t earn enough to both repay the money and maintain a basic standard of living; and his inability to earn substantially more is likely to persist.There are a lot more details to the case if you’re interested. Mr. Hedlund, who makes $40,000 per year, still owes $32,000, but that’s a heck of a lot better than $85,000. I did like this paragraph toward the end: Natalie Scott, a Eugene lawyer who represented Hedlund, said lawyers for the loan agency suggested that forgiving most of Hedlund’s loans would “open the flood gates” to healthy college graduates claiming they couldn’t earn enough and demanding their loans be forgiven.Let’s hope so!