A Successful Student Loan Discharge, Totality of Circumstances

http://www.mow.uscourts.gov/opinions/bankruptcy/federman/marie.pdf

I hope the link works to the case. This case is in the 8th circuit.

OH WOW HHM. That ruling delights my heart, made my day. From 216K to 36K. AWESOME.

My personal opinion is that it is contrary to sound public policy to allow students to run up 216K of debt. In my own past work life at a university, I have seen a 150K loan balance for a master's degree in the arts. There is no way in hell that a person can pay that off in 20 years, let alone ten. It is simply unconscionable to allow students to rack up that much debt in the first place.

OH WOW HHM. That ruling delights my heart, made my day. From 216K to 36K. AWESOME.

My personal opinion is that it is contrary to sound public policy to allow students to run up 216K of debt. In my own past work life at a university, I have seen a 150K loan balance for a master's degree in the arts. There is no way in hell that a person can pay that off in 20 years, let alone ten. It is simply unconscionable to allow students to rack up that much debt in the first place.

I agree. (Let me step up on the soap box for a moment). Student Loans are like a "mean form of welfare". The student loans are a govt. subsidy to allow those who cannot afford college to attend. But, it is not a free ride in the long term and end up putting many people into indentured servitude. The other problem is was the lack of forsight, the wide availability of student loans, in my view, has lead to the spiraling increase in the cost of education. By flooding the universities with money, that lead to higher salaries, increased spending, expansion etc., hence increasing the cost of education and the need for student loans.

Wish this was me - I have had depression since I was 10 years old and now I am suffering from post partum depression as well - well, who isn't depressed as a result from their student loan debt as well, right?

College is becoming increasingly difficult to afford.
Borrowing money for college is a big responsibility but college remains a smart investment for obtaining a satisfying career that earns a competitive salary.

:D

College is becoming increasingly difficult to afford.
Borrowing money for college is a big responsibility but college remains a smart investment for obtaining a satisfying career that earns a competitive salary.

:D

But that statement is a fallacy. You can't even really assign a probability to it because of the inherent randomness in achieving success. You cannot claim that having an education is either a necessary or sufficient condition for achieving success.

I do believe education has inherent value. However, I think you need to approach college like any other purchase. If you don't have the money, you don't buy. If people bought cars like they buy education, 90% of the unemployed would be driving Mercedes. Reason being, the investment in an education is so speculative in the outcome, it is analogous to someone agreeing to a $900 per month car payment when they have no job.

College is becoming increasingly difficult to afford.
Borrowing money for college is a big responsibility but college remains a smart investment for obtaining a satisfying career that earns a competitive salary.

:D

Unless you choose a low paying career like I did - now I wish I had never gone to college!

I tried to have my student loans discharged but it didn't happen. I have been on a hardship deferment, and they sent me a letter today saying they want 30 years worth of payments of $890 a month. Just over $300k with interest. I am a special ed teacher who makes less than $36k a year. I'm not sure what to do...I am taking the letter to my attorney tomorrow. Someone I work with said once I have taught for five years(first year), I can have my loans forgiven. I pray that's true, because having this hanging over my head has me so depressed I am not sure if I can make it 5 years.

I tried to have my student loans discharged but it didn't happen. I have been on a hardship deferment, and they sent me a letter today saying they want 30 years worth of payments of $890 a month. Just over $300k with interest. I am a special ed teacher who makes less than $36k a year. I'm not sure what to do...I am taking the letter to my attorney tomorrow. Someone I work with said once I have taught for five years(first year), I can have my loans forgiven. I pray that's true, because having this hanging over my head has me so depressed I am not sure if I can make it 5 years.

300K HOLY SMOKES. There are different loan forgiveness programs. However, I cann't see any of them allowing you to knock off 300K of debt. Only certain types of loans can be forgiven. See a lawyer, but don't be optimistic you can get rid of it all.

Reason being, the investment in an education is so speculative in the outcome, it is analogous to someone agreeing to a $900 per month car payment when they have no job.

Sadly, I agree. Both my parents are highly educated, my father has a Phd. I have a masters degree. But I think the only smart one in the family was my brother who became a lawyer, and even he says the law isn't what it once was. In my parents generation, having an advanced degree just was a ticket to success. And I think that in sharing that love of learning with their children, they thought they were giving them a financial treasure. The reality of the world now, however, is completely different. IMHO people should only get an advanced degree anymore because they want to peruse a research-orientated or an academic lifestyle. My best friend has a Phd in Biochem and even that gets him basically a middle class life-style. I know people with BA degrees that make twice what he makes and they are working for the Federal Government.

I actually have come to resent my own investment in higher education (from a financial perspective) as it didn't pay off for me. And I have seen it happen to too many of my friends and associates, not just me.

Higher education is a guarantee of nothing anymore.

300K HOLY SMOKES. There are different loan forgiveness programs. However, I cann't see any of them allowing you to knock off 300K of debt. Only certain types of loans can be forgiven. See a lawyer, but don't be optimistic you can get rid of it all.

I'm not optimistic at all.

If you're a special ed teacher in a low income school (and you'd be surprised at how many schools are on the list), you could get up to 17,500 forgiven. I know that's not much in your case though.

http://studentaid.ed.gov/PORTALSWebApp/students/english/cancelstaff.jsp?tab=repaying#teacher

I tried to have my student loans discharged but it didn't happen. I have been on a hardship deferment, and they sent me a letter today saying they want 30 years worth of payments of $890 a month. Just over $300k with interest. I am a special ed teacher who makes less than $36k a year. I'm not sure what to do...I am taking the letter to my attorney tomorrow. Someone I work with said once I have taught for five years(first year), I can have my loans forgiven. I pray that's true, because having this hanging over my head has me so depressed I am not sure if I can make it 5 years.

It would certainly help. I should explain, because of health and employment issues my loans have been on constant hardship forbearance since I finished school. According to the letter I go, 2/3 of that amount are interest and fees and only around $100k is principal.

I think what the person who told you that might be referring to, in addition to the forgiveness program already mentioned, is this:
http://www.finaid.org/loans/publicservice.phtml

If your loans are federal not private, the above program lets you pay on them (income sensitive payments, so that is good) for 10 years and the remaining balance is forgiven. You just have to consolidate your fed loans with Direct, as you will read. No big deal. :) Good luck.
If your loans are private, then you are in the same boat as me! :(

Thank you everyone for your responses. I have given some consideration of requesting they garnish my wages, because I was told that they can only garnish 10% of your gross, which would be about 1/3 of what they are wanting. Anyone know if there's an online source about what they can garnish? Per state I assume?

Thank you everyone for your responses. I have given some consideration of requesting they garnish my wages, because I was told that they can only garnish 10% of your gross, which would be about 1/3 of what they are wanting. Anyone know if there's an online source about what they can garnish? Per state I assume?


CurtInks - have you found out any more info on this? I know that the fed gov can garnish 10% of your income, but of course with private loans (assuming by the amount, you may also have some of these) they need to actually get a judgement before garnishment.

I agree with you though, better off to let them garnish since your income is lower and they can only take a small %.

I wish I had never gone to college or grad school!

Good luck:-)

I'm in the same boat as you, CurtInks, with the amount owed. Not sure what the hell to do about it. I'm just about 59 yrs old. Sounds totally nutso! But after coming to terms with deciding to start the chap 7 bk on cc's rather than go homeless or commit suicide, I've decided I simply can NOT destroy myself over these loans. I only have one life to live & only so much time on this earth. I simply can't allow myself to lose it over loans I can not afford to pay. "My" higher education does NOT pay my bills. (I can't really even use it for anything.)

I'm in California. It's 15% here, not 10%. A friend of mine's wages are being garnished for student loans. He said it took them yrs before they finally started doing it.

I think what the person who told you that might be referring to, in addition to the forgiveness program already mentioned, is this:
http://www.finaid.org/loans/publicservice.phtml

If your loans are federal not private, the above program lets you pay on them (income sensitive payments, so that is good) for 10 years and the remaining balance is forgiven. You just have to consolidate your fed loans with Direct, as you will read. No big deal. :) Good luck.
If your loans are private, then you are in the same boat as me! :(

That public service loan forgiveness program is a JOKE. You have to get your loans on a 120 month payment plan (10 yr plan) and after the 10 yrs your loans will be forgiven BUT you will have no balance left since you have to be on a 120 month payment plan to qualify. If you read the actual program details it even states that after 10 yrs there will be no loan balance to forgive!!

That public service loan forgiveness program is a JOKE. You have to get your loans on a 120 month payment plan (10 yr plan) and after the 10 yrs your loans will be forgiven BUT you will have no balance left since you have to be on a 120 month payment plan to qualify. If you read the actual program details it even states that after 10 yrs there will be no loan balance to forgive!!

inpain66 you are not correct. With the Public Service Student Loan Forgiveness Program, if you make decent money- say 60- 70,000 (depends) a year, true you may have paid the balance anyway after 10 yrs through the IBR. However, someone making 36,000 with a substantial federal student loan balance will benefit hugely from this plan. You are not required to pay your loans under the IBR plan within 10 years, you would normally opt for the 25 yr plan. You will have any remaining balance 100% forgiven with this plan. The less you make and the higher your student loan balance, the better you make out. They go off of your original loan though, so any interest or penalties that have been accruing will not be automatically erased. If your loans aren't all that high and you make fairly good money, then this program most likely will not benefit you.

Of course this program is only for federal student loans and you must be working in public service or any non-profit organization. I have $100,000 in student loan debt. $65,000 of it is federal. If I could find a job at a non-profit or in public service making $40,000 with only modest salary increases, then 1. my payments would be low and 2. my remaining loan balance would be wiped out in 10 years (assuming I make all my payments on time) and. It's a complicated formula, but essentially after 10 yrs my remaining balance of 28,000 would be wiped out. I will have paid 48,000 toward it.

Here is the website with all the information. It has a calculator for it.
http://www.finaid.org/calculators/ibr.phtml

Now my problem is that I have been unemployed since June of 2008. Never in my life did I think I would be unemployed for more than 2 weeks, let alone nearly a year. I can't find any job, let alone on that qualifies for the IBR student loan forgiveness program. So much for a Masters of Fine Art degree.

Just finished reading the BK case. I have been told it's nearly impossible to get SL discharged in BK though.

When they look at potential for earnings, what exactly are they considering? For example, I am in my field of study and have very few raises. If you look my husband's potential, he has been at the same job 10 years and you can see his pay raises. He makes a little more than I do now. He has been there 10 years, me 2 years (with a degree, him no degree).

However I am assuming they are looking at disabilities, medical problems, mental health diagnosis as far as earning capacity?

The factor is not just earning capacity, its.

Earning capacity,
Living Expenses,
Amount of Debt, etc.

Granted, it is true that usually the debtor needs a significant decrease in earning capacity to get out from student loans, but as the case indicates, there are other ways to go about it.

That's terrific. I feel a little better having read it. It gives me hope.

When I talked with a lawyer he mentioned that my situation would be interesting to take to court to see if I could get my student loans discharged. $70k in student loans and not able to find a job in my field when I finished my BS and now still can't get a job in my field having finished my master's. I've been working in a trade since finishing my BS and well...its not looken good at all to get a job in my field of study with this economy and I have and keep trying.

To me it seemed a bit of a long shot but possibly worth a try. It is a bit of a financial hardship as I went through school to get ahead but the only thing I've gotten is more debt.