I think there's a typo: particularLY sad.

Third is just as good as first. Yay!!!

Hmmm...Lewis and Clark Law School. Isn't that where that cute-as-a-button gal in "Whale Wars" graduated from?

Poor martyr. He chose to consumer $350,000 of goods and services while other people were working, and now he has to pay it back! If student loans were dischargeable, students would be gambling with other people's money; if their careers work out (i.e, they win), they pay, but if not (i.e., they lose), we pay. Fuck that shit.

I don't even know what that "gaggle of zombies" comment means, but I LOLed

What really should be done is to lower the ridiculously high Graduate loans - 6.8 and 8.5% Maybe if those rates were realistic, it would be easier for people to pay them off.

And there's no "encouragement" for lenders to make loans anyway - the government is the only one making student loans anymore.

What is the sad part? That this guy is a drunk who took 5 years to complete a 3 year degree and "a long time" to complete a 4 year one? Maybe the "long time" to complete the 4 year one should have been a clue that spending even MORE money on school (and/or booze) might not be the smartest idea.

If anything, this guy HURTS the case of those who want student loan relief, because he is so clearly a complete idiot and despite what some lawyers think, the average american thinks that the discharge of any debt in bankruptcy is grossly unfair to creditors to begin with. This story is completely unsympathetic, and to think that there would be a policy in place to encourage student loan debtors to file bankruptcy is preposterous.

The stories that helps the cause are of those that did what they were supposed to do (i.e. graduated from all higher education in 7 years, with good grades, while not being drunks) and then that are working hard but underwater due to the high cost of servicing loans.

A "mercy rule" doesn't make sense -- are you advocating that collosal loans merit forgiveness based on their size? Doesn't that create a perverse set of incentives? It'd encourage people with low-paying job prospects to keep staying in school and racking up more degrees until they could file for bankruptcy. Wouldn't that result in the top-tier schools effectively funding the lower-tier schools (or at least the graduates of the former funding the graduates of the latter)?

Umm, actually my first thought when I read this story was that you have to be really stupid to rack up $350,000 in student debt in the first place, especially in a state like Minnesota that has good public colleges and one of the best public law schools, all with in-state tuition. It's sad that it's hard to discharge student debt, but let's not forget that this guy made some really poor choices along the way.

ELIE, YOU

I hear it's tough to pay your loans back if you're unemployed.

I went to SMU on a full ride so this is not an issue for me.

"The government says that making student loans nearly impossible to discharge during bankruptcy encourages lenders to make loans to students"

they left out the rest (econraging loans to stundets encourages borrowing for education whcih makes higher demand and thus higher tution which makes higher loans etc etc etc...)

The easiest way to seek discharge of your student loans in bankruptcy court is to sever your spinal chord and wheel yourself into court and cry extreme hardship. Short of that, the student loans will follow you to your grave.

On an unrelated note, I was having dinner last night at an undisclosed restaurant. Apparently, there was some sort of law student/summer associate function happening at the restaurant. I will not comment on the function other than to say that the NYU law student wearing the kangol hat (you know who you are you obese goatee sporting piece of turd) should learn class and some manners. Who were you trying to impress smoking Macanudo cigars you pompous cretin? Yes I was downstairs on the deck having dinner while you boasted a poor man's knowledge of cigars on the upper balcony deck. You clearly do not work for a peer firm. Next time you wish to spare your school from shame, discard your name tag that identifies your school. As a result of the stench from your "poor man's cigar," I had to go to another cigar bar uptown to enjoy my Cohiba. Lastly, did your mother dress you for the event? Ditch the Charlie Brown sweater and go to Big and Tall and buy a size 20 shirt and a size 55 sports jacket you sloth.

Awe, poor me. I made stupid life decisions and now have to deal with the consequences. Boo hoo! The tax payers shouldn't have to be burdened with this guy's mistakes (all 350,000 of them). This entry is chock-full of liberal pablum.

This man has a serious illness. He has no ability to pay off these huge loans. Why should the debt not be dischargeable? We send billions of dollars to AIG but crucify our students.

At least this guy never suffered the indignity of having a Boston chick shit on his chest and steal his wallet.

PE:

Just curious here - why don't you just say that your firm is peerless? You've never identified a peer firm.

Last night I had a threesome with Elie Mystal and Sonia Sotomayor. Should I be concerned?

"He chose to consumer $350,000 of goods and services while other people were working, and now he has to pay it back!"

The question is, why should we treat the loans he incurred to consume those goods and services differently from any other loans? Unless of course you're saying that no loans should be dischargeable through bankruptcy, which is a perfectly valid position to take.

"Jesperson's story is particular sad. "

Now that's a well edited sentance.

This comment is addressed to comment no. 19.

I have identified at least 2 peer firms in earlier posts. I will not repeat myself.

I think the real leason from these stories is that losers should not go to law school after 35.

#20 - Just be grateful they did not devour you afterward.

"Now that's a well edited sentance."

So is this one.

WHO DO YOU WANT TO PAY FOR THIS IDIOT'S MISTAKES, HIM OR YOU?!?!?!

I'd like to hear from the anyone in the audience that can confirm and/or add to PE's story.

8th Circuit = TTT.

Why didn't the lenders at some point decide to cut off a guy with a serious illness, an apparent inability to complete a degree, and few job prospects? It appears he made a mistake by investing so heavily in education to the exclusion of other opportunities, but so did the lenders. Surely they deserve to suffer some loss as well. Now, rather than have the process play out in an orderly fashion in the BR court, the parties will have to divide the losses through an endless series of disputes. Awesome.

PE is a soon to be 3L at michigan

Eh, bleeding heart liberal as I am, I don't have any sympathy for this clown. If it took him "a long time" to acquire his undergrad degree, something that anyone with a pulse should be able to do in 5 years at the absolute maximum, maybe he should have figured out that law school was a bad idea. I rarely trumpet the political catchphrase "personal responsibility" but I think I'm going to do it here. His loans, his problem. If we start letting people like him off the hook, the subsequent costs to the banks are going to be passed on to those of us who are actually paying back our loans after being careful in the manner we acquired them. I'm not paying for him.

PE is with Sullivan & Cromwell. He does offsite document review. Not sure of the two firms he considers to be peers with S&C.

The arguments that the poor schlub should have known what he was getting into all make sense. But the same arguments can be made for any other kind of debt, and does not explain what, if anything, is so special about student loans that they must be treated as non-dischargeable. I get the argument that our society's ability to fund future generations' education depends on the current generation paying the loans back, but the same type argument can be made about any other type of credit (mortgage, business debt, and others -- after all, lenders' ability to fund future generations of borrowers depends on the current generation's repayment.) Even income taxes -- which also fund education, among other vital public services -- can be dischargeable in bankruptcy. Treating student loans as a different animal makes no sense, particularly where, as here, making the debt non-dischargeable won't increase the lenders' ability to collect by one iota.

Look, I graduated from law school with $150K in debt in 1995. I took a job that paid $45K per year in a small firm in a small city (by choice--big firms not my thing; I turned down a biglaw job), I made the monthly payments because I didn't buy anything else. I eventually worked my way up to owning my own firm and paid them off after 10 years.

Now, I own a house, car, and have no debt other than the mortgage. I am happy and married and life goes on. And I am proud I paid my debt.

Oh yeah, during those 10 years of poverty, I had to take 6 months off for depression and cancer treatment. There is something called a hardship deferrment. I sought and got one for that time period. It never occurred to me to try bankruptcy.

This was my debt--I borrowed money to go to an expensive top 10 law school. I made that choice, and I was not going to stiff my lenders (gov and private).

So suck it up, asshole. Don't take on debt you cannot handle. Have a plan B.

Only poor blacks and hispanics deserve any kind of assistance with financial trouble. White people can go fuck themselves.

If this guy was Latino, Sotomayor would like the story better and would forgive his loans.

Q: "Are you talking about the distances women have to travel because in parts of the country, abortion is essentially unavailable, because there are so few doctors and clinics that do the procedure? And also, the lack of Medicaid abortions for poor women?"

Justice Ginsburg: "Yes, the ruling about that surprised me. [Harris v. McRae -- in 1980 the court upheld the Hyde Amendment, which forbids the use of Medicaid for abortions.] Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don't want to have too many of.

Ha ha. Typical Liberal Elitism. Explain this away Ellie!

Q: "Are you talking about the distances women have to travel because in parts of the country, abortion is essentially unavailable, because there are so few doctors and clinics that do the procedure? And also, the lack of Medicaid abortions for poor women?"

Justice Ginsburg: "Yes, the ruling about that surprised me. [Harris v. McRae -- in 1980 the court upheld the Hyde Amendment, which forbids the use of Medicaid for abortions.] Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don't want to have too many of.

Ha ha. Typical Liberal Elitism. Explain this away Ellie!

@18 - What is so degrading about that?

BC1L

to 39: try this

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/16/AR2009071603485.html

to 39: try this

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/16/AR2009071603485.html

24 -

I'm a 45 year old guy, just graduated, starting a job in SEPTEMBER at 160k in NYC. What's the moral of that story?!

So we are supposed to feel sorry for this guy huh? Ok, if it's not his fault he is in this mess, if it isn't he who assumed the risk of the debt and got the info about how the loans are not dischargable in bankruptcy then who did? Who else is more at fault than he is for not doing more research on the field he chose or hitting the bottle? Who is the villain here?

to 39: try this

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/16/AR2009071603485.html

I agree with the decision that he should be responsible for his school loan debts. He knew he was going to have to repay the loans at some point when he took them out. If you don't want to repay loans, THEN DON'T BORROW THE MONEY! Very simple solution.

Go to a cheaper school and don't become an alcoholic. You are a moron Elie. When you sign up for student loans you know that you have to pay them back. It's called personal responsibility, which is something your lazy Ivy League ass cannot begin to understand.

I agree with 30, clearly this guy is dumb and deserves what he gets but some change in the law regardless is also warranted. Making a bankruptcy discharge at least slightly more possible would put more pressure on the sophisticated party here to make better decisions. Honestly student lenders shouldn't give out more than ~$50,000 to people of average means and intelligence. If the lenders had some risk or the regulations were otherwise changed to encourage them to actually loan based on the risk this could happen. As is, the system is apparently built to encourage the banks to make horrible decisions such as loaning $350,000 to someone with no prospects. Would they have given him a cc with that limit? Hell no, he probably has a $1000 limit, why, because that debt is dischargeable in bk it forces the lender to be smart.

34 -- the reason student loan debts are dischargeable is tha almost all students have a negative net worth once they finish schooling. Thus, nearly all are eligible for bankruptcy. If one could discharge student loans in bankruptcy, people would borrow to go to school, and file for bankruptcy right after they graduated. (Many doctors, who make little in residency, did this in the 1980s). The loan market would dry up. The comparison to goods is inapposite, as no one would have lent this gentleman $350,000 to buy stuff. The large amound of student loans, and the risk borne by the lenders, justifies this rule.

First to say education is not the silver bullet to upward mobility.

Banks bailed out and get to start over.

Student no bail out and screwed for rest of life.

That simple.

Banks bailed out and get to start over.

Student no bail out and screwed for rest of life.

That simple.

Banks bailed out and get to start over.

Student no bail out and screwed for rest of life.

That simple.

My watch is worth more than that.

Dr. Louis Ziccareli Esq LLM CFP

Q: Why are we statutorily exempting loan companies from responsibility? There is no need to coddle the lenders and make sure they get 8.5%.

SNL: Don't Buy Stuff You Can't Afford
http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff

This includes buying (worthless) education on debt that you can't afford to pay back.

What a loser.

PE is a visiting professor at NYU

43, my comment was specifically directed at 35 year old *losers*, if you can land a $160k job out of law school in this economy you are by definition not a loser.
-24

Maybe if he were a minority he could have gotten an AA scholarship.

Its also partly a matter of collateral. Why wouldn't a lender require any collateral for several hundred thousand dollars in student loans? Because its so much harder to discharge those student loans in bankruptcy. That safety net makes up, in part, for the lack of collateral. This in turn makes the necessary loans available to students who wouldn't otherwise qualify because they've got nothing else to back the loans.

21- if you could take away one's degree, or ability to continue using it, after a person has had student loans discharged, then those loans would be more like other dischargeable loans. As it stands, that can't be done, so the prospect of those loans not going away is the only real incentive for students not to rack up ridiculous debt then throw up their hands and walk away when it gets tough to pay them back. A ding on your credit report is not a sufficient deterrent to walk away from hundreds of thousands of dollars of debt in your early or mid 20s when you've got nothing else to lose.

49 -- isn't that true of any unsecured loan? If you had money, you would not be borrowing; if you had assets, it would be a secured loan. Of course the borrower of an unsecured loan is going to be insolvent and eligible for bankruptcy - however we have unsecured loans and the world has not stopped.

This should only happen to white men.

Sotomayor

This just shows how worthless the average American citizen is. Pay your dets A holes. What is wrong with people thinking they can just spend their way into massive amounts of debt and then be relieved.

- in favor of debtor's prison

you realize that the reason it's not dischargeable in bankruptcy is so that they can keep the borrowing costs low? it's an uncollateralized loan, you think lenders would be charging same rates if they didn't have protections from bankruptcy? it's precisely this that serves as quasi-security and lets students borrow funds at affordable rates in the first place.

you need to stick to your areas of expertise, i.e., eating oreos.

I guess this means PE won't be able to get his student loans discharged after he graduates and no one will hire his pompous ass.

If I were him, I would sell every asset I own, move to Vietnam, South America, or Africa, change my name, and live out the rest of my life in hiding. That's pretty much his only way out at this point.

The problem is that unlike almost any other kind of transaction, the banks have almost zero default risk. So there's pretty much no reason for them to pay any attention to the prospects for repayment. Want to borrow $150k to go to cooking school? Just sign here...

What is fair unfair about refusing to discharge student loan debt, Elie?

Jesperson consumes $350,000 worth of goods and services, and the bankruptcy court says someone else should not have to pay for it. The lender didn't get any of the benefit of the goods and services Jesperson consumed; he did. So why should someone else have to pay?

And, practically speaking, if student loans were dischargable, then the interest rates would be much higher and fewer people could afford higher education. (It's simple econ, interest rates reflect risk, and without the risk of discharge in bankruptcy, the lender can offer lower rates. Add back that risk and the lender will have to charge higher rates to compensate for the deadbeats who whine enough to get their debts discharged.)

15 - PE? Is he still alive? Yawn.

Call me a horrible elitist, but this fact pattern tells me that this guy should not have been in law school and possibly that Lewis and Clark is one of the law schools the ABA needs to unaccredit to save the profession.

What chance did this fellow, who staggered through college and law school, literally, of being successful enough to pay off that debt and come out ahead in the bargain? I'm all for the Horatio Alger myth American dream, etc. That's me and my family's story. But the ABA needs to let people take grave gambles in pursuit of their dreams in other professions.

Ours is already full up with people who don't have the will or ability to practice successfully and merely drag down the value of legal services and the name of the profession.

Perfect solution: put a 7 (or some other arbitrary number) year toll on the time between when you leave school and when you can discharge your loans. Make good faith payment during those years a requirement for discharge. Then do your means test. As for fraud, anyone willing to slum it for the better part of a decade deserves this.

63, most people don't get hundreds of thousands of dollars of unsecured loans, without the interest rates hitting the 30% range. Hell, even with credit card loans of a few thousand dollars, the APR can get in the 20 and 30% range if you borrow for a long time. If people only needed $5,000 of student loans and are willing to pay 20% APR, then your analogy to unsecured loans would be more relevant.

For people who are whining about the unfairness of student loans not being dischargeable in bankruptcy: you are free to finance your $200,000 education with dischargeable debt financed by credit cards or personal bank loans. Why don't you check out how much you can actually borrow and what the interest rate would be, and then tell me that you now understand the need for student loan lenders to be subsidized through non-dischargeability.

Lat-

Ask two little leaguers this: Kid A buys a glove, throws back a few too many juice boxes, and loses his glove in the bushes. He can't play the next game without it. Kid A asks Kid B to let him use his glove and give him a juice box. Kid B can't play without his glove either. What should Kid B do?

I know exactly what Kid B would do: he'd tell Kid B to go f*** himself, then loudly slurp on his juice box while waiving his glove in front of Kid B yelling "you lost you glu-ove!! You lost your glu-ove!! Your parents are trailer trash!! You got no money!!"

You apparently never played little league. It's astonishing we give anyone a shot in bankruptcy, let alone this screw-up.

I generally like Above-the-Law, however, its advocating for morons like this that keeps ATL from being a legitimate site. Yes it sucks that this idiot has 350K in student loans. However, he was the idiot who took them. No one forced him to do so. (or forced him to become an alcoholic...)

This is all about personal responsibility. If this ass-clown would have been responsible in the first place, then he wouldn't be in this mess.

Also, I'm a little sick of hearing about how "law school is too expensive." Yes it is expensive, however the trade-off is that if you work hard and succeed, then you will make a shit-load of money in your lifetime. (as opposed to what you would make with your useless psychologoy, english, polysci degree) But...its a calculated risk. You aren't gauranteed to make a lot of money. And if someone isn't smart enough to figure that out, then they shouln't go to law school, and they definately shouldn't be an attorney.

At the end of the day, you reap what you sow. This jackass borrowed too much money, and now because he scewed up his life, the bankruptcy court is supposed to give him a free pass? Something is wrong with this picture. And something is wrong with ATL if they are advocating this position.

Stop whining about bailed out banks, you looters. Libertarians never wanted the banks bailed out, nor do they approve of leeches like Jasperson demanding that someone else pay for services they consumed.

Pay your own way, you damn parasites. If you can't afford something, don't buy it.

Every time I get a "FIRST!!!" I carve another notch into my desk. I'm too late this time, but just you wait.

Am I gay if I like it when my secretary pounds me in the ass with a strap on?

72 - very good point. But, I suspect that the actual price of education would be substantially less if this were the case. Now, schools have zero incentive to control costs - whatever they charge is backed up by federal loans. I think schools have too many colleges and worthless degrees that have negative ROI.

Maybe we should let the free market take over. You would have schools who would have more 3 year BA degrees to cut costs down and attract consumers who would otherwise not attend. More technical programs like engineering. The scam schools like Lewis & Clark would also be shut down. Lenders would realize that these schools are horrible returns and their grad's prospects are miserable. Maybe then college could go back to meaning something and we wouldn't have this over-credentialized world where you need a 4 year BA to sell insurance.

As a human, I do have sympathy for this guy. But I'm so tired of the entitlement complex that pervades the younger generations (to which I belong, so I know that of which I speak!). While I don't exactly encourage being heartless, the comments to this post at least ease my mind that some people in this world still take personal responsibility for their own actions.

PE, commas are your friends. Use them.

Best news? Obama is going to blow the private student lenders, with their phony non-profit guarantees and government-subsidies in the form of bankruptcy protections, out of the water. Savings to the taxpayer? $87 billion over 10 years.

http://www.nytimes.com/2009/07/11/education/11educ.html

My bad, I mean to address that to Elie, not Lat. I thought this piece seemed like crap for Lat.

Sorry Lat.

WTF Elie.

-75

79 = PE

Wait, because the lower courts said he could discharge his debts and he then foreseeably and detrimentally relied on their decisions, doesn't he have a promissory estoppel claim against those courts? Couldn't he sue for all his attorneys fees and the full amount of his debt as punitive damages? Does anyone have any experience suing lower federal courts?

"69 - X consumed $Y of goods and services, and the BK court says someone else should have to pay for it."

That's pretty much the story of every bankruptcy case.

As for simple econ, you should also consider that cheap credit inflates prices. So if student loans were not so easy to get, tuition would be much, much lower. Since the majority of students these days have to take out 5-digit loans for a year of education, do you really think that schools could maintain their obscenely high prices without easy credit?

As late as 30 years ago tuition in the US was roughly in line with the developed world. Now a US education --even at lackluster state schools-- costs twice a Canadian education, and multiples of any western european education. The main driver of this inflation? Credit.

24, 59 - gotcha. The problem with that advice, however, is the difficulty of honestly evaluating your own "loserness." I would venture a guess that many people viewed me as a loser prior to starting law school. In fact, so did I to some extent. It was a big risk for me, particularly since I attended a third-tier school for geographic reasons. But it appears to be paying off, at least for the short term. Long term is a crapshoot for everyone right now. I thought I'd do well in law school, but in hindsight, I know I am very fortunate (and worked very hard to get the high grades). And by the way, I also have struggled with alcohol.

So how is one to know if one is a loser, or just a slow starter... life is full of difficult choices and perhaps that fellow made some bad choices, but they could have turned out well for him.

Having said all that, I agree that these loans shouldn't be simply forgiven. And now, with the new Income Based Repayment provision in effect as of July 1, noone really has an excuse for not making payments.

Let's say his debt is discharged, and then the next day he marries some chick from Goldman Sachs and they get a $700,000 bonus. He would have all this money, and then wouldn't have to pay off his debts. That wouldn't be fair.

It seems like a lot of the posters on here are against the very idea of bankruptcy. Fair enough but maybe we should consider why every capitalist country has a system of debt forgiveness/restructuring.

Nobody tell them how many billions in credit card and medical debts are discharged each year or they may start blowing gaskets.

66 and others--the problem is that students aren't getting the benefit of low borrowing costs, it just goes into tuition. I think it's crazy that someone with no ability to repay is able to get 350k in loans, but I also think it's crazy that you can spend 350k on an education in Minnesota.

Sure this guy is an idiot, but the argument isn't as cut and dry as some would like to make it.

Let us remember, it was only a few months ago that the VERY SAME BANKS got bailed out. What does that mean? It means they (like the guy) made choices, and some were informed choices and others were uninformed choices. Some paid off, and others didn't. In the end, they overstretched themselves and FAILED. They failed so fucking badly that they had to be bailed out or they'd go down and take us all down with them.

Enter stupid guy. Yes we all agree he's stupid, and that he should have to pay back his debt. But perhaps while acknowledging this, we could look to the INTEREST RATES that he's having to pay back. After all, they're profiting banks who, like him, failed. Also, we can make him pay his debt back WITHOUT the pompous attitude about personal responsibility.

Hell, this guy was an alcoholic and idiot, so it makes sense he fucked up. what excuse do the huge banks have, with their billions of dollars in asserts and human capital from the smartest institutions around the world?

Everyone messes up sometimes, so get off this guy's case.

5: Sort of like I-banking, right?

90, those credit card and medical lenders knew the discharge possibility on the debt and factored that into the interest rate.
You are free to make student loan debt more dischargeable, but only prospectively to loans made from that time forward, so that the lenders can adjust the interest rates accordingly (to approach the 30% unsecured credit card rates).

We need to stop overselling education in this country. Not everyone needs, or will benefit from, graduate school or even undergrad. The problem is that since everyone else gets wasteful degrees, it leads to a beauty contest that causes competitive waste.

My dad was a car salesmen. He never went to college, but was able to do his job very successfully. These days it would be impossible to get that job without an undergrad degree, despite the fact that it's completely unrelated. So we're wasting about $50k-100k for every car salesman to get drunk at State U for four years. Multiply that by half the jobs in this country. The economic harm is greater, of course, because there is an opportunity cost of having people sit on their asses for four years instead of producing.

And now that everyone has some kind of useless undergrad degree, the competition has stepped up to the grad level. Pretty soon both your car salesman and your house painter will have JDs.

Idiots, whether this guy gets his discharge or not, our tax dollars already paid the lender back and the guaranty agency through reinsurance. So, taxpayers lose regardless. If the US lets the GA and Lender off the hook, why shouldn't our borrower get cut a little slack?

The big problem with student loans is not that they are difficult to discharge, but that they are too easy to get. People complain about lax lending standards in the mortgage market, but what qualifications do you need to get massive student loans? None. They give tens and hundreds of thousands in loans to 18 year olds who have never worked and have no concept of what it takes to pay that kind of money back. They just figure they'll worry about it later. It's all a subsidy for the education lobby, which walks away with the cash leaving the student on the hook, raising tuition rampantly because they know that students can just borrow the money to pay it.

PE - If you didn't repeat yourself, your shtick would have maxed out a post #2

who lends law student over 300K? especially a non-trad student? what a stupid business decision. i'm all for accountability for borrowers, but jesus christ - what were the lenders thinking?

monthly payment for a 20 year loan of 300K at a 5% interest rate is a shade under 2 grand a month. what the did they think this guy was going to do to make those kind of payments?

if you're going to lend 300K to an individual - it better damn well be secured by a mortgage on a house.

Seriously, that's why I choose Penn State (Dickenson) Law. I mean, it's way cheaper than the Philly Campus (Penn Law), but has all the same Ivy-League prestige. Plus, I think they'll let me take a few classes at the Wordun Business School over the summer.

I paid off my student loans, back in the day (1997) I was overjoyed once the shackle was released. These loans make sense for most of us provided you have a clue what you are doing in life.

The reason bankruptcy is tough is simple. Most students will qualify for chapter 7, and the taint of bankruptcy is easiest to deal with if you still have some parental support and don't yet own much, like most recent grads. Without this rule, we'd all graduate and after the hangover wore off troop en masse to the Federal Building. I'd have done it, ethics be damned.....but like an "upside down" homeowner, the ethical choice is not always the right choice.

Nice try, though. Our boy will live his life on a cash economy, or hookup with someone with a credit rating and live in their shadow.

99, a better question is why you, the taxpayer, voted for the liberals who passed the laws to indiscriminately subsidize student loans to people like him. The lender gets paid either way.

66 is exactly right and 7 displays a shocking naivete and ignorance for someone who is presumably trusted with protecting other people's legal rights. although subsidized student loans were previously slightly lower interest, but even now, these "high" rates (6.8 and 8.6 percent) are much lower than any other comparable unsecured loans. the most common unsecured loan to people with little history of payment on debt are typical consumer credit cards, which charge between 20-30 percent interest.

89 - yeah, all those i-bankers in MN. Or he could win the lottery. Or he could strike oil. Or he could release a hit #1 jam. Or he could find wherever they hid the money in the movie "Fargo." Why shouldn't he have to repay his debt with so many realistic options?

The court did the right thing. But all you "don't buy it if you can't pay for it" dingbats are blowing steam. Very few 21 year olds with BAs can finance their own education. Further, investment in education is always a risk. [Talk to a PhD in Sovietology in 1991, or MFE Structured Finance in 2008.] It is precisely the universities and scholarship, fellowship, and student loan agencies that "take the risk" in financing an education for profit. They know more about these risks, and they send the acceptance letters and control the cashflow.

Is the American dream now merely to live within your means, to revive "the trades" for poor folk? Leveraged investments in human skills, fused with an ethic of hard work, are perfectly healthy when they are good investments. But not all good investments succeed. The fact that the money flowed to this guy suggests everyone thought he was a good investment. There you go: no blame-game, just bad circumstances.

I hope this guy plays to the media, writes a book, becomes an iconic figure in some way, and pulls seven figures giving talks and making appearances. Even better if he hires one of you to handle a mammoth and tedious contract he is too busy to worry about. Why? Because I'd like to see him get out of his own crap; and also because I like to believe that, in America, you can't count a dog out until he's dead.

# 7 addresses the problem nicely. Up until 2006, student loans had much lower interest rates. It is totally unfair that someone who took out loans before 2006 gets a 2% rate (lower in some cases if you qualify for the timely payment interest rate reductions) and we have loans at 7-8%. Even though you still have to repay the principal amount, it makes a huge difference in the payments that have to be made. Think I'm exaggerating? My husband has 50K in student loan debt from an MBA he completed in 2004; his interest rate is 1.625%. He consolidated at 2.875 in 2005 and has since received a 1% rate reduction for making timely payments and another .25% reduction for having payments drafted.

Why do people keep saying "if they banks got a bailout, then this guy should get one, too." Who the hell do you think you are talking to?

Do you all honestly not realize that there were tens of millions of Americans OPPOSED to the bank bailouts, and that those same people are opposed to bailing out parasites like Jasperson?

It was your liberal-asses, along with some "compassionate conservative" Republicans that bailed the banks out. And its you same, lazy, irresponsible leeches that want to bail out Jasperson.

You can use the bank bailouts to charge hypocrisy against people who never supported the bank bailouts in the first place.

Counsel Emeritus-

As you've stated in previous posts, you've been a lawyer for 40+ years. You are therefore out-of-touch and irrelevant.

A few tasks for you:

1. Keep searching the office for the mimeograph machine.

2. Please change your colostomy bag; clients keep asking about that horrible stench.

3. Go find some carbon paper for the office.

Please bill your time to client development.

- The Partnership.

Banks required a bailout because it was necessary to stabilize the economy. This guy deserves a bailout because encouraging/allowing him to take on so much debt to attend a 3rd-rate law school was patently unconscionable.

Fine - don't help students. But please help the Donald build another gauche casino after his companies declared bankruptcy for the 8th time.

Dear people using the bank bailout analogy,
You're idiots. If this guy were "bailed out" like the banks or AIG, he would get to:
1. refinance his loans at higher interest rates
2. have the government take 79% of all of his future earnings for the rest of his life, like AIG, or have a lender take 100%, like the former BearSterns.
I didn't see any debt forgiveness in the bank bailouts.

Novel idea - maybe this will discourage people that don't want to practice law from going to law school.

Elie, you can't discharge your moobs through bankruptcy.

And no, they are NOT considered Troubled Assets!

Screw the mercy rule. What the hell is a mercy rule anyway. Liberals love to talk about mercy, but liberals are full of shit, because they don't ever have to pay for all the mercy they make the rest of us pay for. There's nothing at all about this guy's situation that calls for mercy. If he wants to discharge his obligation to pay off his debts, then he should go back to drinking. That should take care of it in relatively short order.

How did this guy borrow this much without a co-signer? I borrowed less than him, but had to have the second half of my loans co-signed, and I know a bunch of other people who did as well. Once I had a big firm salary, they let me refinance by myself, but up until the refinancing was done, I carried life insurance to cover my loans...

"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."

The gun is *not* trained on students "trying to make themselves better." Why should this guy get a free pass for seeking multiple degrees and then forsaking the profession in which he could have entered? What if I want a loan to go to cooking school, and then decide I don't want to be a chef? Do I get out of that? Lenders shouldn't be responsible for people's experimenting with their careers. I could understand an argument about college loans, but that's it.

Why would you carry life insurance to cover your loans if they are discharged by death?

PE has been quiet for awhile. Maybe he's studying for exams.

PE works for Van Winkle

116 -- cooking school can easily cost six figures. Most grads become cooks earning about $20,000 with almost no prospect of becoming chefs, who earn about $50k. I think your lenders would applaud you getting any job that actually pays you.

Yeah 115 that is strange there isn't a co-signor. Having a parent co-signor at retirement age is a good incentive to keep working hard to pay off the loans.

34, neither federal income taxes or mortgage loan for a principal residence are dischargable in B Court. But this case is absurd. How can a lender legitimately claim that they too are not at fault when they lent this guy so much money? Only because they know they have the bankruptcy code to back them up. Non-Discharability has only lead to increased tuition prices, because the banks have limited risk, which in turn leads to more debt. Ah! The vicious cycle of over-leveraging once again! Let's let the market work its magic and put the risk of bankruptcy back into the pricing equation on the lender's and school officials side. There should be caps on the amount of debt that cannot be discharged.

IDIOTS . . . THIS ISN'T A MORAL ISSUE ABOUT PERSONAL RESPONSIBILITY.

DISCHARGED OR NOT, HE'S NOT PAYING IT BACK AND IT WILL BE BORNE BY OTHER PERSONS.

ALLOW DISCHARGE, ENCOURAGE GREATER PRUDENCE IN LENDING & REDUCE THE AMOUNT ULTIMATELY DEFAULTED UPON.

Comment removed by moderator.

Wonder if we had a more sympathetic debtor, if the result in the 8th Cir. would have been different. Not talking about a wheel chair bound debtor, just maybe a single-mom, three kids, who graduated in top 25%, but had her $160k starting salary eliminated when she was laid-off after two months of employment.

Theoretically, did the right things, but just got shit on. Different result? Probably not, but probably would make the three judges pause a bit.

123, two words. Moral hazard.

I kind of have a problem with the concept of forgiving student loans.

I worked my ass off in high school to get a scholarship to undergraduate school. In college, I was the one in the library all weekend, every weekend, so I could get a fellowship for grad school. What were the people who are now complaining about their student loans doing? Partying! Screwing around, getting drunk, having fun. All things I did not get to do. I got out with no debt because I worked my ass off to get the free financial aid. People who did not work their asses off have to get financial aid that they have to pay back. Seems fair to me.

123 - agreed, except for the all caps hissy fit

and get the government out of the lending business. grad school prices would be lower, and the lending market would be more balanced, if the government didn't subsidize student loans.

127: I'm sure everyone that gets into Columbia, Duke, Stanford, etc gets a full-ride right? And I'm sure none of those non-scholarship attendees worked their ass off in school like you. Sure, they could have gone to lesser schools, but not everyone who takes out studend loans is some f*ck-up who didn't work his/her respective ass off.

Seriously what about the income dependent repayment? when i got my fafsa docs and had to choose a repayment plan, the income dependent plan would have had me paying back 1/3 of what i borrowed and being debt free in like 10 years. was that a fucking typo?

129 - If they went to Columbia, Duke, Stanford, etc., without any aid, they did so with open eyes, and probably under the mostly correct assumption that it would be easier for them to get a job with a degree from that school. Not a sure thing, but easier. People who go to top schools should be smart enough to do the risk assessment.

127 = urm. it wasn't because you were in the library, assh*le.

130: not a typo, but when they include you and your spouses income in determining what you can pay, and don't factor in both parties debt load, the income dependent payment is not all that much less (at least in some cases)

I realize that IBR wasn't availalbe when he filed, but it seems like a perfect solution for this guy's problems. He won't avoid paying sometihng toward his loans, but the dollar amount will be capped and the (very laege) unpaid amount at the end of the IBR plan will be forgiven.

Of course, he probably also has a large chunk of private loans, but there are those who have found that by shifting the debt to a type that is dischargable, they were able to dump those private loans after a couple of years.

127 -- you're right! Everybody should work there asses off, because then it will magically be possible for everyone to earn a fellowship! It's a little known fact that most charitable foundations and schools actually have a limitless supply of money for merit-based aid, and they just don't give it out because they find most applicants unworthy.

Did you ever think that your fellowship that the school gave you to pad its USNews ranking was being subsidized by outsized debt being taken on by your fellow students? You are a fool and a tool.

131: I hear ya and agree. I'm a little unsure that a risk assessment done four or five years ago would have factored in a complete collapse in the legal market, but your point is well taken. I was more suggesting that its not just dipsh*ts that are stuck with a bunch of debt and no current way to repay the loans.

I graduated with $5K in debt in 1985 from a T10. The 1980s was the best decade to be a lawyer. I'm sorry you all missed out.

126, you have shit for brains & an extremely poor understanding of the term 'moral hazard'.

explain how providing for discharge under certain circumstances --> greater selectivity in lending --> less would-be debtors comparatively more prone to default (primarily those attending 3d/4th tier l.s.'s @ ~$35k/yr) --> greater borrowing by persons w/ dismal future earning capacity b/c they might later discharge?

moral hazard is already present, but it’s created by the broad availability of student loans. It allows hopelessly optimistic 18-24 yr olds to ignore realities re their own intellect/aptitude in a given area while racking up debt and essentially guaranteeing financial ruin for the duration of their lives. THEN place the burden of that debt on others at death (or sooner).

THERE’S YOUR MORAL HAZARD.

Love,

123

76. You said everything that I wanted to say. I just want everyone to reread your comment now in lieu of an original post.

My personal inclination is to say screw this guy, make him pay, but I wonder -

If student loan debt were dischargeable (perhaps after some number of years and if it could be proved that your income was at some pitiful level), that would obvioulsy drive loan rates way up and cause the lenders to flat out deny some candidates. If this happened, it would inevitably mean that fewer people would take out loans to go to school and therefore fewer people would go to school, but it would also (finally) inject some sort of cost-consciousness into our institutions of higher education, which at the moment act as though there is no figure too ludicrous to charge for school, because so far, there hasn't been. They would have to at least attempt to control costs if students and parents were forced to foot more of the bill up front. Students actually taking out loans might give some of that back in higher interest rates, but if you are successful after graduation, the loans are very refinancable.

Now, I can buy the argument that college should be accessible to all, so we shouldn't screen people in that manner, but what about law school? How about we make law school debt dischargeable? Don't we all agree that law school costs too much and, paradoxically, that there are way too many law students at the same time? This would be a way to deal with both situations. In addition, it would have the desired affect of killing off some of the bottom-feeder law schools, as banks are going to be far less likely to lend to somoene going to Cooley than they are to someone going to Columbia.

Am I crazy? Would this work?

123/138 - That's not what moral hazard means. Before you go lecturing others on their poor understanding a term, you should understand it yourself, and just because you don't like the consequences that a particular policy results in doesn't make it moral hazard.

138, if you don't understand the moral hazard on the side of borrowers, who have the most information about their future potential, I can't really help you.
And yes, there is a difference to the borrower between 1) having a non-dischargeable loan but not being able to fully pay it back, and 2) discharging that loan through bankruptcy. If there were no difference, the guy here wouldn't have bothered trying to discharge his debt.

Shouldn't The One be saving the little guy?

Oh, sorry, he's too busy giving trillions of dollars to his campaign contributors, the banks. And who's going to pay for those trillions, and by extension, his next reelection campaign? Why, that same little guy of course!

We are well on our way to setting up a system of indentured servitude. Most people are or will be in debt from the moment they become adults, with debts insured to the banks by the government and which can never be discharged, you will only be able to obtain medical treatment from federally controlled and authorized treatment personnel under federally regulated guidelines implemented by federal bureaucrats, the government strictly controls the means of transportation and can and will search you and confiscate your data and belongs at will on the flimsiest of accusations (got some cash in a lockbox, you're under arrest!)...

The dream of freedom that was the U.S. is SO OVER. Time to flee.

140 - yes, I agree.

I would have to disagree that this guy is particularly sympathetic. I live in MN and read the entire article when it was in the paper. The guy has not made a single payment. I would have more sympathy for someone who was attempting to repay (even a small portion) but was unable to do so. When you don't even try, at all, it seems very suspicious.

140 - The problem with cost-consciousness isn't the availability of funding nearly as much as it the fraudulent employment statistics the schools are putting out.

No rational person would pay $120,000 for a degree that's more likely than not to get them a miserable job making less than $40K/year to start. The reason they do is the schools are publishing bogus employment statistics.

In any other industry, the people doing this would be (rightly) prosecuted for fraud. For some reason, our policymakers continue to let schools skate and keep conning gullible young students into forking over $40K/year.

147, snitches!

Higher education is a commodity which, in the United States, often comes with a high price tag. Just as with a credit card, you should be wary of making an expensive purchase that will be difficult to pay off in the end. Maybe it should be a wake up call to people spending six figures for a third- or fourth-rate education.

A "needlessly unfair burden"? This loser whiskeybreathed asshat chose to take on an ungodly amount of debt. His choice, his fault, his problem. This is even worse than the jetski broken leg con.

Yes, 143 why don't you pack your bags and leave? If you are not being sarcastic when you say this country is "SO OVER," then I agree you should leave. Rural Mexico ought to afford you all the liberty you'll ever need.

Elie-- great post. Well done. I hope people will give you praise when it is due.

#31: "PE is a soon to be 3L at michigan"

The rampant sandwich stealing and having the Internet's biggest buffoon as a student have seriously eroded Michigan's reputation. The rising 3Ls will be lucky if any of them get hired.

36 = Obama

106 with a catastrophic economics fail. All interest rates were extremely low in the early to mid part of this decade. They hadn't been that low in the 90s, and they weren't supposed to stay that low for very long, which they didn't. Rates aren't up now because of some evil plot by banks to make more money off of grad students. They're up because interest rates across the board are up, relative to 2004. Go soak your head.

@100,

1) Penn Law isn't an Ivy. No one thinks it is.

2) Penn State Law isn't Penn Law. No one thinks it is.

3) You are referring to the Wharton School of Business at UPenn, not Wordun (or whatever bastardized spelling you chose).

4) I live in Indiana and have spent less than a week of my life in Pennsylvania, and understand these basic concepts.

5) If you are a current student, you should drop out as you appear to have comparable intelligence to Mr. Mark Jesperson.

As for the debt situation, like many of my peers (recent grads), I still want to go to law school. I've wanted to be a lawyer for such a long time now, I am not letting fear stop me. But the difference between myself and those taking irrational loans/risks is I chose to go where I was offered a large scholarship in addition to in-state tuition, minimized costs by not taking any other forms of loans (i.e. mortgage, car, or undergrad).

Evidently, little league baseball players have more common sense than our federal courts. Those kids understand the concept of a "mercy rule."

Really? Let's look at this from all sides:

When students apply for graduate loan - like law school - most have no work history, no credit, no savings or assets other than the trust fund grandma left them.

The reason that banks can lend money to someone in this situation is that they aren't discharged in bankruptcy. Otherwise, no bank in its right mind would lend a 22 year old with no credit, no income, and no earned assets.

I feel bad for this guy - but I would feel worse for the countless other people - who dont have rich mommies and daddies - that couldn't go to law school without such a high standard for discharging student debt.

Elie - You are a moron.

There is ZERO political support for making student loans dischargeable in bankruptcy. Taxpayers don't get free money to pursue graduate degrees and they aren't going to let people walk away from the debt while retaining the free education.

I'm astounded that Elie apparently thinks Jesperson makes a sympathetic case for discharge. He chose to pursue 11 years of third-rate undergraduate education and 6 years of TTT law school. Assumption of risk.

Even though he'll never be able to discharge or repay the loans, isn't the amount of his monthly bill capped at something like 10% of his income? Can't remember where I heard that.

1) He should work at a place that helps with repayment (i.e., fed government).

2) Is this stupid loan forgiveness movement also include private student loans, or just law school loans?

21 - so banks will make the loans available to people without a work history or credit and not have to worry about $350K loaned out dissappearing immediately upon graduation.

Though I agree with you this shouldn't be the case and college should be only for those that can afford it or have so much potential they can get the scholarships.

@155

Wait, I'm confused. Are you saying Penn State Law isn't IVY? I thought their football team was Ivy League Champion?

Love,

100

P.S. Stay in Indiana. Everyone who knows anything about Penn Law knows that you can take up to one class per semester at the Wordun school.

This guy is the poster child, not so much for discharging student loan debt but for not allowing it in the first place. Never made one single payment. Looks like the biggest mistake he made was not pursuing an LLM (does Concord offer one?), he may have been able to live off of the bank until retirement

Serious questions:
(A) Why are people afraid to have student loan debt discharged? What is so special about student debt as opposed to other debt that is allowed to be discharged? If other debt can be discharged, why not student loan debt?

(B) We got rid of debtor's prison, so why are people so in favor of having one for this type of debt? You might not like what he did, but we got rid of debtor's prisons for a reason, to allow people to start fresh &/or pay back debts via BK. Why not allow this person to do the same?

Before anyone starts slamming me, answer these questions first, please.

I don't see why idiots who run up 100K in credit card debt can get it discharged but people who actually make an investment in themselves (even if they are retarded about it) can't.

partners at quinn discharge a gaggle of zombies all the time. it is no big deal.

quinn stud

163 -

Other types of debt - such as consumer debt - the creditor makes a business decision based on risk. Student loans are federally backed. You can get private student loans, I believe those discharge at bankruptcy, but the interest rate is significantly higher and the credit standards are higher...an applicant needs to actually be credit worthy. That is why it is difficult for a 21 year old to get a mortgage, even if its secured, but they can get the same amount in student loans.

Hopefully if/when you complete your first year of law school, you'll take a secured transactions class that explain the difference.

I think some one above said student loans are too easy to obtain, but there is no meaningful standard to apply to most people who need student loans - what would you propose? SAT scores?

My mail carrier went to Lewis & Clark. And yes, the crazy eco terrorist on Whale Wars is also a Lewis & Clark grad.

163 - (A) - try to get $350K credit limit on your credit card at the age of 18 with no job and you'll see why student debt is different. Some idiot thought an 18 year who wants to borrow to go to college should be able to.

(B) - Who is going to prison. Much less prison, he's spending money on stuff now and yet hasn't made a single payment. As far as why not let him start fresh like others that file for BK, see (A)

(C) - Slam away everyone.

163 here:

166 thanks - I don't know about private student loans; SLM for instance, I believe you are not able to discharge their private student loans (but don't quote me).

What about FHA home loans? Are they not federally backed, but you can discharge those, no?

(And by the by, I am not in law school & don't intend to go.)

I haven't paid on my student loans in 9 months. unemployment deferral.

I don't know what's more likely:

1. A student loan bailout for everyone except those who went to law school...because...well, most people just don't like attorneys. OR

2. A student loan bailout for just law students...because...well, there's such a large portion of Congressmen who are attorneys.

163/169 -

I'm not sure about FHA loans, they are secured against the home so I would assume that works a little differently than student loans. The problem with student loans is that there's nothing to secure it against, so the government steps in and says - in a rough translation, that the courts won't discharge the debt, basically treating it as secured debt. Of course, with traditional secured debt, the collateral gets sold..but, what to do when there is no collateral?

Agreed, this isn't a great situation, but it provides incentives for banks to make loans to people who aren't creditworthy and gives those borrowers a great opportunity at education. What they do with it, of course, cannot be guaranteed -- as this case demonstrates.

Maybe that marxist puke in the White House will stop the guarantee of Goldman, AIG and GE debt and help out here.

164, if you don't like to pay for your education with nondischargeable student loans, you are free to pay for your education by taking out credit card debt, which can be discharged in bankruptcy. Let me know how that works out.

164, if you don't like to pay for your education with nondischargeable student loans, you are free to pay for your education by taking out credit card debt, which can be discharged in bankruptcy. Let me know how that works out.

163:

(A) Student loans have lower interest rates and require no collateral. This is possible because they are not dischargable. If you want to require borrowers to offer secured property against the loans, or have lenders charge 20-30%, then we can have dischargable debt. But fewer people will be able to afford college.

(B) Refusing to discharge debt is not tantamount to debtors prison. Hyperbole much? Non-discharable bedt just means this jackarse will have to turn part of his paycheck over to the lender he tried to stiff until he pays back the loan. Harldy the same thing as being confined to an 8x8 cell, is it?

Why are we talking about this guys case as if it matters?

Jesperson will NEVER pay those loans back. Considering his current age, living conditions, and alcoholism, he will likely die before even half his debt is paid back. Since death of the obligor discharges the balance of the loan (read the fine print, kids), the lenders will lose this money anyway.

The Grim Reaper will accomplish what the bankruptcy court couldn't. Death is the great equalizer; eventually we are all worm food.

"In the long run, we are all dead" -- John Maynard Keynes

enough with your stupid crusade against student debt. it sucks, we all have it, but that's the way it works. it's not going away. stop bitching. if it was dischargable in bankruptcy, your interest rate would be double cause a buncha smart folk out there would graduate, file chap 7, start a new with a shinny *free* law degree.

People who say you couldn't rack up $350k in credit card debt, let's go to more realistic numbers. A huge number of students racked up $80k in student debt, and another huge number have racked up $80k in credit card debt, esp. during the recent bubble when people fresh out of bankruptcy court were getting daily credit card offers.

Why should the people who invested in their education to the tune of $80k be forced to pay, while the guy who bought $80k in plasma TVs, expensive vacations, and calf implants is allowed to walk away?

179, why don't you go ahead and rack up $80k in dischargeable credit card debt, but use it to pay your tuition, and let me know how "realistic" and feasible that is.

179,

1. Student loans would not exist if they could be easily discharged in bankruptcy. Guess why - THERE IS NO COLLATERAL FOR THE BANK TO REPO IF YOU DEFAULT!!!!! Thus no rational lender would extend the loan if you could discharged student loans by filing for bankruptcy the day after you graduate.

2. If a financial institution permits a borrower to run up $80K in unsecured credit card debt, the institution deserved to get burned if the debtor files for bankruptcy.

3. The higher education bubble/racket needs students (that can pay) and thus needs student loans.

4. The credit bubble popped and easy credit will continue to dry up and will never return.

But 181 - lots of other loans DO exist YET are EASILY discharged in BK. So, why do you think student loans would not exist? Credit Cards (loans) can be discharged. Medical bills can be discharged - none of these have collateral. If student loans in order to be discharged needs to have higher interest, then let's go! Perhaps, then, the market would work to keep the costs of colleges down.

Damn, I know it was hours ago, but -- PE: Cohiba? Really? Does anyone who knows anything about cigars think Cohiba is a good brand? You're a dipshit, I still think you and the other great dipshit avatar RA are the same person, and, regardless, you are a cock-watcher.

182, once again, such dischargeable "student" loans are available to you. Just pay your tuition with your credit card. You'll get high interest rates and dischargeability. Go ahead, nobody is stopping you.

one less b-1 bomber or aircraft carrier
and more liberal discharge rules.

182, I agree with the last part of your email but the public policy of the US has been access to higher education for all. Higher interest rates (that are cost prohibitive) would violate that policy.

As to why I think student loans would not exist, the simple fact is that a lender isn't going to give you >$100K (unsecured) to go to school so that you can graduate and immediately file for BK. The lender would have no ability to satisfy the loan if the borrower defaulted.

Think of the housing bubble. A lender of an interest only mortgage had the ability to foreclose on an asset (the house) to recoup their principal (or a portion of it) if the borrower defaulted. Those loans have dried up because lenders are getting hammered as people walk away from homes (even though there is some collateral to satisfy a partion of the debt).

Now think about a student borrower being able to discharge the entire loan (unsecured by any underlying asset). No lender could assess the risk of default and set terms that would make sense. Lenders would stop making traditional student loans (like they stopped making interest only loans) and would likely require a borrower to put up collateral to secure such a loan. Such a student loan would be discharged in BK but the lender could take the collateral to satisfy the loan.

Finally, medical bills are different as they are not loans. They are invoices for services rendered. Legal bills can also be discharged in BK.

181.

I don't think people should be able to lightly brush off their debt. The bank already paid out this money -- it's not their fault if someone fails in academia and/or the career world. Why should they be left holding the bag? (Or, more realistically, why should taxpayers and responsible borrowers be left holding the bag?)

The only advantage to making student loans easier to discharge would be to incentivize banks to stop giving out student loans so freely. Higher education isn't for everyone, so not everyone should be given loans for it.

The ABA is destroying the legal profession. They will accredit virtually any institution, which has led to a glut of schools that should never exist, desperately trying to enroll students who naively hope to join a career they will never succeed at.

This poor kid should never have attended, but the ABA and Lewis & Clark Law School (and the state of Minnesota, for not giving a flying fuck where its lawyers come from) are at least as much at fault for encouraging his dreams as he is for entertaining them.

Depressing.

Student loans should not (and are not dischargeable) unless there is a hardship. Most of the time, a hardship means that you were prevented by circumstances beyond your control from benefiting from the education you received using the loans. Most of the time, the person needs to have a severe medical disability that prevents them from working at all. If you can work, you should be making payments. For federal loans, use Income Based Repayment (which started July 1) to reduce payments. For other loans, be honest with the lender from the outset and they will generally make reasonable payment arrangements.

Demonizing lenders for wanting to student loan borrowers to honor the contracts they make is ridiculous.

115 & 117: "Why would you carry life insurance to cover your loans if they are discharged by death?"

Only Federal student loans are automatically discharged at death. Private student loans will go after your estate and your cosigners. Therefore, if your parents cosigned on your private student loans, you need life insurance. Preferably term.

48 - TITCR. Banks should have had an incentive to STOP loaning this asshat money based on a combination of 1) his overall debtload, and 2) his shiTTTy law school (and corresponding career prospects). People this retarded are not capable of deciding on their own to give up.

I think I figured out what the "particularly sad" part of this story was--that this mouth-breather could pass the Minnesota bar on the first try. So much for quality control.

80,

There seems to be a consensus that non-discharge-ability is needed in order to keep student loans available. There seems to be an alternative view that non-discharge-ability makes for a moral hazard risk whereby lenders finance students with poor prospects and schools have no incentive to control costs.

What if there was a limit to non-discharge-ability. The first $100,000 loaned plus its associated interest, perhaps? This would make $100,000 worth of education widely available and put a limit on the moral hazard.

122: Federal taxes are dischargable under BK.

To the "new media public relations associate" posting misleading and inaccurate crap about student loan debt:

The government already backs defaults. There is no risk to lenders. These are loans they are paid to make, and what they charge in interest is supposed to encourage private actors to get into the market and compete.

The only reason the debt is not dischargeable is because that allows the industry to add fees (25% of principal is standard) and other penalties which ensure that the student will never pay it back.

Your argument that the bank should get to penalize students as much as it wants or "we wouldn't have student loans" is completely ridiculous. The bank is getting paid back either way, the penalties are just a way to increase profit.

The debate seems on this topic seems to revolve around two possible outcomes: (a) he is forced to pay the money back or (b) he is allowed to walk away.

The more likely outcome is that he is never able to pay it back. He is a painter, and, at times, has practiced law for at most $48,000.00/year. If they garnished his wages for the rest of his life he'd probably just make the interest payments. As a consequence of this debt he may end up making choices about acquiring assets (buying cars vs. leasing) that are intended to protect him for losing those assets (a car you own might be seized -- a car you lease won't be). He'll likely never get a mortgage to buy a house.

My point is not that he shouldn't held accountable for his choices, but that in the real world unless he wins the lottery he won't be held fully accountable in any case (if being held accountable means paying it back).

There should be room for compromise as was suggested above -- you can't discharge unless you've been out for X (7?) years, made some good faith payments, show hardship, and, perhaps, you can only discharge debt above a certain amount (50k?).

Are we supposed to feel sorry for this idiot? He should have done the math before he borrowed so much money to get his crap degree.

@100. If you think going to Dickinson will give you any job prospects whatsoever, you're delusional. I can name maybe 12 grads from the class of '08 who are employed in positions that make over $50k (and are still employed), and the 2 people with federal clerkships will be jobless in a month with no prospects. In fact, I know a prosecutor in that class who is making $19k a year--no joke. The class of '09 kids aren't even looking. Seriously. Career Services told them to "not even bother." Awesome.

The larger problem is that law school costs $100k, in just tuition, minimum. To call that "outrageous" would be the understatement of the century. And with that kind of set-up, unless you're the heir to the Max Factor fortune, no one can "afford" law school.

I find it super ironic that the same bunch of clearly conservative yahoos who keep preaching "personal responsibility" and "choice" are the same people who preach that Welfare recipients should "get off their asses and work or go to college and make something of themselves so they won't be a drain on my paycheck!" Well, kids, guess who bears the brunt of non-dischargeable student loan debt? Poor kids who go to college to better themselves in the hopes of being able to, you know, not be fucking poor. When I went to college, I was so poor that the estimated family contribution on my fafsa was $10 a year. I went to law school so that I could have a career that would allow me to feed myself and my family, who still live in abject poverty. Too bad the feds weren't handing out grants to law school--loans it was. By the time I graduated, the recession was upon us. More than 50% of my class is still unemployed, a year later.

Is it my fault no one is hiring? Should I be blamed for choosing law school? I crunched the numbers all my life--I decided in 4th grade to go to law school, so it wasn't just some crazy miscalculated choice. I chose my undergrad major based upon the type of law I wanted to practice.

This isn't a fucking joke to the people living it. The fact that if I was some dumbass who bought a bunch of mindless crap on my credit card and never repaid it, I could possibly get the debt discharged in bankruptcy, but get no relief for student loans is insanity. I did the "right thing" and worked my ass off to bring my family out of poverty only to be faced with an economic depression wherein I'm too educated for grunt work and not experienced enough for good work--which puts me in the exact same position I was in before I even went to college. Wait--I take that back. I'm now -$100k. Had anyone ANYONE mentioned that there was a very high probability (or frankly any probability at all) that I would never make enough money to pay back these loans, there is no way in hell I would have taken on the debt load. I can't go home to bunk with mommy & daddy until the economy picks back up--they can barely feeds themselves. So you coldhearted bastards can laugh it up about the lawyer living in a tent. I dare any one of you to say with a straight face that people like me "did this to themselves." What I did was try to start a legitimate career. You should be admonishing any law school who prices tuition at a rate more than double what a graduate's average salary will be and then throws up their hands and says "well, no one said life was fair." They call it a "professional" degree for a reason.

With this reality coming to light FINALLY, only the class of 2012 can really be said to have made a deliberate "choice" about this debt.

rofl @ 198.

you made the decision in 4th grade, and somehow claim it wasn't a crazy miscalculated choice? I hope you enjoyed your TTT.

Geeze 198....yep it is all someone else's fault. Maybe you need to move? Plenty of jobs in my state for lawyers. Stop crying and feeling sorry for yourself and do something about it.

I find it funny no one really mentioned that fact this guy works as a PAINTER.

Others have mentioned that he never made a single payment..NOT ONE.

Frankly sounds like FRAUD to me..considering he doesn't even work as a lawyer how impressive is it that he passed the bar in 2002 on the first try.

He lived off the government for 10 years in school..passes the bar, doesn't work as a lawyer..he is a PAINTER...sucks 350K out of the taxpayers and makes NO ATTEMPT what so ever to pay one thin dime back...yet people think he debt should be discharged?

The guy belongs in JAIL.

I'm sorry, but millions of Americans get by just fine without a college degree, let alone a graduate degree. I have a hard time feeling sorry for a single guy who took 11 years to finish his degree.