Education / Schools, Student Loans

Bankruptcy Won't Discharge $350,000 of Student Loan Debt for Law Graduate

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Maybe the student loan bailout movement just received its first martyr. While people in the industry have long known that student loans cannot easily be discharged through bankruptcy, maybe a high profile case will clue the general public in on this needlessly unfair burden for those who seek post-graduate degrees.
Mark Jesperson had $350,000 in student loan debt and filed for bankruptcy. Lower courts ruled in favor of Jesperson, but then his case reached the 8th Circuit. The Minneapolis Star-Tribune reports:

The Eighth U.S. Circuit Court of Appeals has ruled that the 45-year-old Grand Marais man cannot escape more than $350,000 of student debt he piled up over more than a decade.
Jesperson had hoped to discharge the debt in bankruptcy and won the first couple rounds in court. But last week a three-judge panel reversed the lower courts’ decision and said he must pay the money back.

Evidently, little league baseball players have more common sense than our federal courts. Those kids understand the concept of a “mercy rule.”
But regular readers of Above the Law know that this decision is not at all unusual. In our society, it is easier to discharge a gaggle of zombies than it is to get out from under student loans.

While the dollar amount involved is unusual, experts say the latest ruling is not. It’s extremely difficult to get rid of student loan debt, even through bankruptcy.

Jesperson’s story is particularly sad. More details after the jump.


Mark Jesperson is 45. He’s battled alcoholism and it took him a lot of time to finish off his undergraduate degree. It took him five years to finish his law degree, but he finally graduated from Lewis and Clark Law School. He sobered up, but his debts are a hangover that simply won’t go away:

Sober for several years, he passed the Minnesota bar on his first attempt in February 2002.
Jesperson “borrowed heavily from government and private lenders” to finance his degrees, court documents state. Since passing the bar exam, he’s never made more than $48,000 per year.
In 2006, Jesperson went to bankruptcy court to rid himself of the debt.

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Big banks are too big to fail. Mark Jesperson is too small to save.
The government says that making student loans nearly impossible to discharge during bankruptcy encourages lenders to make loans to students. Jesperson had a different perspective:

“The system’s set up as such that most people — people like myself — cannot complete a professional degree without the help of student loans,” Jesperson said. “Then, even if that profession doesn’t work, even if things go wrong, there’s no way out.”

Jesperson isn’t working as a lawyer. He’s a painter who lives in a trailer. How is he going to pay off $350,000? Well, he probably won’t, not in this lifetime. But it is nice that the 8th Circuit has made the point that if you seek post-graduate education and things don’t work out, you will be punished to the full extent of the law for the rest of your natural days.
Education might be the “silver bullet,” for upward mobility in American society. But something is very wrong when the gun is trained on the very students seeking to better themselves.
Student must repay $350,000, court says [Minneapolis Star-Tribune]
Earlier: $400,000 in Student Debt = Character & Fitness Fail
Student Loan Bailout: You Only Have to be Broke for Ten Years

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