There are so many young Americans who today are facing crushing consumer debt problems due to the fact that they tried to better themselves by going to a top-flight college or graduate program in order to put themselves in a position to obtain a good job. The problem is that those who attend a great school in almost every case can not do so without incurring close to if not more than $75,000 in debt. Many of these students no doubt enter into a student loan in order to finance these degrees with the best of intentions of paying the money back. However, the sad truth of the matter is that colleges are charging so much money to finance higher education that very few students will be able to ever pay back these loans without living a life of a bare minimalist.
If a consumer had any other type of significant unsecured debt if $75,000 and they came to my office, I would at the very least have a serious discussion about filing for bankruptcy. The problem is that Congress has put various limitations on Title 11 and the Federal Bankruptcy Code which restricts almost everyone from obtaining any type of debt relief on student loans. There has certainly been a lot of talk in Congress about amending the bankruptcy laws as it relates to discharging student loan debt. Yet, talk is all that we have really seen come out of the government over the past decade since the Bankruptcy Reform Act was passed in 2005.
Perhaps most disturbing are comments by far too well-off members of the legislature that try to shift the blame to the former students who are now hard working members of the American workforce. For example, House Republican, Dennis Reboletti of Illinois recently made a comment that he worked two jobs to put himself through college. Well, Congressman, you may have worked two jobs to pay for your education, but students in this day and age could work 5 full time jobs and still not even earn 10% of the funds needed to pay for their schools costs and living expenses at most major American universities.
In today’s reality, filing for bankruptcy is not an option because of the large barriers to discharge that the law imposes on student loan discharges, where a consumer needs to prove to a Federal Judge that they can not pay for the loan today and it is unlikely that they will ever be able to pay back the loan due to a medical condition. I do think that we need to have real bankruptcy reform to avoid the need to go through adversary proceedings in order to discharge huge student loan bills, but we also need to address the overriding issue that major universities and colleges are acting like pigs with respect to the fees they are charging, simply because they realize the government will continue to allow students to borrow more and more money, and then turn around and generate large profits on the interest.
This article was written by Attorney Michael Goldstein, a consumer bankruptcy attorney for the Law Office of Goldstein and Clegg, LLC.