Student Loan Crisis, Law Schools, And More

Another case of inability to discharge student

Student Loan Lawyer
Student Loan Lawyer

loan debt.

Judge Harlin Hale, the Dallas bankruptcy judge in Thomas’ case, said he felt a “great deal of sympathy” for Thomas in his December 2017 order but said that his hands are tied due to legal precedent. The “demanding standard” adopted by federal courts in the 5th Circuit that includes Dallas says borrowers must show “total incapacity” to pay their student loan now or in the future in order to erase the debt, the judge said.

Although bankruptcy is federal law, and theoretically the same throughout the country, the different Circuit Courts of Appeal have different standards.  Michigan is in the  6th Circuit, which is not as stringent as the 5th.

Continuing from above linked article. comments from my friend John Rao:

that interpretation is contrary to the plain language of the law that requires a showing merely of “undue hardship.” But the bankruptcy law does not define that term, leaving it up to judges to interpret it.

Student Loan Debt and Law Schools

The student loan bubble is biggest in law schools, which have soared from outrageous to ridiculous.

taxprof.com reports from a recent American Bar Association panel discussion on that topic:

“The students can borrow as much money through those programs as they want,” Currier said. “So if Harvard Law School or New England Law School said, ‘Tuition at our school next year is $200,000, and living expenses are $50,000,’ the federal government wouldn’t say, ‘You’ve got to be kidding me!’ They would say, ‘Where can we send that check for $250,000?’” ...

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Right.  And the students probably already owe a ton for their undergrad degree.  And have  never had a paying job that withheld taxes from their pay.  And the colleges keep the tuition, whether the student on the hook for the student loan gets a job, or even graduates.

What could go wrong?

There is a bill on the table that would

Currier and Stephen Daniels, a senior research professor at the American Bar Foundation, both drew attention to a current bill that would impact the federal student-loan program and potentially cause havoc for law schools and law students. HR 4508, the Promoting Real Opportunity, Success and Prosperity through Education Reform Act was introduced in the House of Representatives in December.

“That bill, as currently written, eliminates the loan forgiveness programs that are now in effect, and it puts a cap on student borrowing for graduate and professional education of $28,500 a year,” Currier said. “And I venture to say that if a cap of $28,500 per year were put on law school borrowing through the federal student-loan programs, one of two things would happen: A lot of students would then not go to law school because they couldn’t afford it. Or the interest rate they would have to borrow on the private loan that they would have to take out to supplement that would be at a rate of interest that would make it really difficult to justify the decision to go to law school.”

So, it is unthinkable that law schools (and other colleges) would reduce their tuition, if the consumers (students) could not pay the going rate?

They were able to raise their tuition because the government paid no attention and just kept increasing the student loans, and the students do not know any better.

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Michigan Student Loan Lawyer
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Michigan Student Loan Lawyer
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Discharging student loans in bankruptcy really difficult, some states worse than others. Law schools have seen the biggest tuition hikes in the student loan bubble era, any relief in sight?
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