Student Loan Repayment

I’ve said countless times that discharging student debts through bankruptcy is nearly impossible because you must make a showing of “undue hardship.”

Showing undue hardship is a very high bar, and it takes a very long time. Prospective law students don’t really understand the difference between student loan debt and something like credit card debt until it’s way too late. And even when it’s too late, most people (and many lawyers) feel that it’s not even worth trying to convince a bankruptcy judge that a person holding a J.D. has the “certainty of hopelessness” required to get student debts discharged.

But an article this weekend in the New York Times suggested that more people should give “undue hardship” a whirl. Sure, the guy the Times chose to feature is freaking blind, but even absent a physical disability, the article suggests that undue hardship might be a real possibility for most people.

Hey, it doesn’t hurt to try. At least, it hurts less than the likely plan B of stabbing out your own eyes….

double red triangle arrows Continue reading “Can You Show ‘Undue Hardship’ On Your Student Loans? You May Be Surprised.”

Professor William Birdthistle

Welcome to the latest installment of Lawyers & Economics, our occasional video series on financial topics by Professor William Birdthistle of Chicago-Kent College of Law. He’s joined in some of these videos by an acting professional: Johnny Kastl, television actor turned 2L at Iowa Law, better known to some of you as Dr. Doug Murphy of “Scrubs.”

In the last video, Birdthistle and Kastl tackled the Greek debt crisis. Sadly enough, that problem remains unsolved, to the detriment of the world’s financial markets.

Today’s topic isn’t going away anytime soon either. If you have — or are thinking of taking on — student loans, keep reading….

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Yale is making a slight change to its low-income loan forgiveness program, and it’s going to make it a little harder for people who leave Yale Law School and take low-paying jobs.

Now, this isn’t anything to yell and scream about. Yale is still committed to making loan repayment feasible for people who don’t take the Biglaw money and run. And they still have one of the most generous programs in the country.

But the program is getting a little less generous. Which isn’t a great sign about the long-term ability of lawyers who have the financial flexibility to service poor or working-class clients….

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As we mentioned in Morning Docket, more and more law school graduates are trying to seek bankruptcy protection from their mountains of student loan debt. Bankruptcy? Really?

Now, we know that reading comprehension is tested on the LSAT, but apparently, once students complete the law school entrance exam, that skill goes right out the window. How do we know? Because law school graduates, who freely signed up for student loans as law students, are now trying to shirk their repayment responsibilities. They are the 99% (of people who sign on the dotted line and think nothing of it until it’s time to face the consequences).

All the documents these law school graduates signed and claimed to have read and understood prior to accepting their student loans — well, they had some words to say about bankruptcy. Important words. Here are some of them, pulled from my very own master promissory note:

We will discharge (forgive) your loan if: [y]our loan is discharged in bankruptcy. However, federal student loans are not automatically discharged if you file for bankruptcy. In order to have your loan discharged in bankruptcy, you must prove to the bankruptcy court that repaying the loan would cause undue hardship.

Aww, you think you’ve got an undue hardship, precious little snowflake? Well, think again….

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Two petitions of possible interest showed up in our inbox today:

1. In favor of student loan forgiveness: This petition, reminiscent of Elie Mystal’s call for a student loan bailout, “strongly encourage[s] Congress and the President to support H. Res. 365, introduced by Rep. Hansen Clarke (D-MI), seeking student loan forgiveness as a means of economic stimulus.” (We mentioned H.R. 365 in Morning Docket.)

2. In favor of law school transparency: This petition, posted by Professor Paul Campos over at his formerly anonymous blog, calls for “the American Bar Association to require all schools it has accredited to release clear, accurate, and reasonably comprehensive information regarding graduate employment, by for example implementing the proposals outlined in Part III of the Law School Transparency Project’s white paper, A Way Forward: Transparency at U.S. Law Schools.”

We might have more to say about these petitions later. For now, we’ll just pass along the links (and you can argue the merits of these petitions in the comments).

Want a Real Economic Stimulus and Jobs Plan? Forgive Student Loan Debt! [SignOn.org]
Law School Petition [Inside the Law School Scam]

Earlier: Student Loan Bailout. Just Do It.
The Tenured Law Prof Turned ‘Scamblogger’ Reveals Himself

We write about depressing news for law students and law school graduates all too often these days, which is a very, very sad thing. We know that you don’t want to be reminded about the impending doom you may soon face. We really do wish that we had more positive news to report. But in this economy, it’s just not possible.

Gone are the days when earning a JD meant having automatic employment prospects. Gone are the days when having student loans wasn’t completely debilitating. These days, the JD has taken on a new meaning. It doesn’t just mean Juris Doctor anymore. These two are a little more fitting: Job Dilemma and Jumbo Dumbass.

The Connecticut Law Tribune has come out with an informative piece just in time for new 1Ls to realize that they may have embarked upon a six-figure mistake….

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Under new management?

There has been a lot of talk in the media lately about how law schools are failing to adequately prepare recent graduates for the working world. Because after having your nose in a book for three years, let’s face it, you probably don’t know how to do “useful things with the law” that would actually help a client.

Law schools have also been under fire for their apparently inability to employ recent graduates in the legal work force. While some law schools are simply gaming their employment numbers, others are creating temporary employment opportunities so their graduates can be employed at graduation.

And in the spirit of killing two birds with one stone, law schools may soon have a solution for both of these problems. Instead of inventing temporary jobs to make you “practice-ready,” they might invent a whole law firm….

double red triangle arrows Continue reading “Can’t Get a Job? Lacking Lawyer Skills? Try Working for Your School’s Law Firm”

I don't care how it works, just give me my degree.

My wife and I have made this proposal to our Harvard creditors: they forgive our debt, we give the school a baby. A “pure-bred” Harvard baby that Harvard can dress up or perform experiments on or whatever. It will have to be a black baby, which might underwhelm some Harvard officials, but that’s got to be canceled out by the fact that the media won’t much care about what Harvard wants to do to/with a black baby. The “where’s the justice of Caylee????!!!!!” crowd won’t be on their ass.

I think it’s an elegant solution. My wife thinks I’m getting off easy (because my “contribution” to this form of debt repayment would once again be de minimis). And our creditors say: “We only accept straight cash, homey.”

But I’m just ahead of my time. In the U.K., people are already suggesting that indebted students should be given the opportunity to barter down their loans with sacrifices of the flesh….

double red triangle arrows Continue reading “The New Way To Pay Back Educational Debt: Sell A Kidney!”

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