THE WAR ON COLLEGE EDUCATION. PART 2

Bankruptcy. In 2005, Congress changed the nation’s bankruptcy law. Before 2005, student loans were discharged in bankruptcy just like other debts. However, since 2005, student loans are no longer discharged in bankruptcy. What does that mean? Consider this situation – there are 2 brothers, Brother A and Brother B. Brother A runs up a debt of $100,000 in student loans to become a doctor. Brother B doesn’t go to college. Instead, he becomes a full time surfer dude. He runs up $100,000 in credit card debt traveling around the world so he can surf all year long. (There are people like that.) In July, he surfs in California; and in January, he surfs in Australia. Both brothers declare bankruptcy because neither can repay his debts. Brother B, the surfer dude, will leave bankruptcy court owing nothing. His credit card debts, including principle, interest, and late fees will all be completely wiped out by bankruptcy because it is credit card debt. On the other hand, Brother A, the doctor, will leave court still owing 100% of his student debt, plus interest, late fees, and penalties.

‘Undue Hardship.’ The bankruptcy law of 2005 does contain a provision that allows people with student loans to have their student debt discharged in bankruptcy court if they can prove that the repayment of their student loans would create an ‘undue hardship’; however, the law does not define the term ‘undue hardship’, and it does not delegate to any government department the right to define the term ‘undue hardship’ or to establish hardship standards. Some bankruptcy courts around the country have established their own standards for defining ‘undue hardship’, but these rules are strict and tough to prove. As a result, it is very hard for a person with student debt to have his debt discharged in bankruptcy court on any grounds.

I ask you – What kind of country will the United States become if a college education becomes just another luxury for the children of rich people?

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