WSJ Reports that Parents are Drowning in Student Loan Debt
As a bankruptcy attorney in Georgia, I see it all the time. A child gets accepted into a prestigious university but they don’t have the cash to pay the enormous price tag. Reluctant to tell their child that they cannot pursue their dreams, more and more parents take out student loans for their children with the expectation that their child will be able to pay these loans off at a later date. Fast forward years down the road and these parents are stuck with a debt load that neither they nor their child will never be able to pay.
The Wall Street Journal reports in the April 25th, 2017 edition on the front page that “PARENTS ARE DROWNING IN COLLEGE LOAN DEBT.” As I read this article, I was shocked by the large numbers of defaults. The Journal reports, “Over 330,000 in U.S. program haven’t made a payment in a least a year.”
What hope is there for these parents are who have student loan creditors chasing them into their retirement years? Hopefully, Congress will change the laws to provide some relief. Until then, there is not much hope.
Can you discharge student loans in bankruptcy?
The short answer is no. However, there are a few small exceptions.
Because of the legal standard required, only rare cases are appropriate for even trying to discharge student loans. For the first time in my 19 years of bankruptcy practice, I had such a case. Earlier this year, the Bankruptcy Court in the Northern District of Georgia granted the discharge of student loans to two of my clients who had cosigned on their daughter’s student loans in the early 1990s. Although the original balance was in the neighborhood of $20,000.00, with interest and penalties it had ballooned to over $70,000.00. As both clients were either retired or approaching retirement, they faced the prospect of spending their golden years weighed down by this massive debt.
Fortunately, their lender was a private lender that was not prepared to successfully oppose a discharge proceeding, and we were able to have a default judgment entered against the defendant. Although these clients are no longer under this enormous burden, the same is not true for millions of Americans. As education costs skyrocket – college educations now cost 600% more than they did in the 1980s – student loans are also on the rise. The total student loan debt in America is now over $1.2 trillion and climbing. More people begin adult life with five-figure debt – or, in the case of these two clients, face the prospect of ending life with that debt – than at any other time in American history. One day Congress will fix this issue, but in the meantime, every small victory against the broken student debt industry is no small cause for celebration to the debtors who are among the select few to receive discharge.
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The take home message is that no matter how you feel about your case and no matter which creditor is after you, it is worth the time it takes to come into my office and share your story with one of my attorneys. You can believe that if there’s a way to clean your slate, we will find it.