For Students Saddled With Unpayable Student Loan Debt

We often highlight the success stories of our industry. I think this is very important because it keeps current students open to the idea that they can succeed. Like every industry, we will have people that make colossal gains, start businesses, and create a great life with lots of opportunities and experiences. On the other hand, there may be individuals out there who, for whatever reason, cannot finish school or do not land very lucrative work at the start of their journey. I had a rough time starting off. I didn’t have a lot of life experience and most of the work I got was from being a reliable and steady “yes man” instead of having strong negotiation skills or even strong steno skills. Things worked out great for me with time and effort, but it’s time to acknowledge that not everybody is going to have that same experience, and let you in on America’s best-kept secret.

Student Loans Are Dischargeable
For over a decade America has sunk deeply into the myth that student loans are never dischargeable. I heard this as a student. I was told this by my mother and countless role model figures in my life. This myth is so prevalent that I never once bothered to fact check it. These days, you can find resources online to explain to you that they are forgivable, dischargeable, and under what circumstances. There are even United States government sites with that information. For easy access, I’m going to repeat some of the highlights here. Student loans can be…

1. …forgiven with certain public service work and/or work as a teacher.
2. …discharged in the event of school closure.
3. …discharged in the event of total and permanent disability.
4. …discharged or not required to be paid in some circumstances where a school falsely certified your eligibility, you withdrew, or you have a repayment defense.
5. …discharged via bankruptcy.

The courts must decide if repaying the loan would cause you undue hardship. Undue hardship was not defined by the Congress, and so the courts look at whether you would be able to maintain a minimum standard of living if forced to repay the loan, whether there is evidence the hardship will continue for a significant portion of the repayment period, and whether you made a good-faith effort to repay the loan prior to filing for bankruptcy. A court may order the loan fully discharged, partially discharged, or the court may order you to repay the loan. In the event the court orders you to repay the loan, the repayment may be structured differently. It is notable that this is not a magic fix-everything button. There are significant hurdles and it is harder to discharge student loans through bankruptcy. But if you’re stuck in debt and can’t seem to claw out, it just might make sense to put together some money for a lawyer to help you navigate your way out of tens of thousands of dollars of debt.

This is really important to get out there because compound interest works both ways. When you have a savings account or certificate of deposit, every accrual period means more interest added to your money, which means more interest on future accrual periods. When you take out a loan or take on credit card debt, it works the other way, where your minimum payments are meant to pay the interest and pay a small part of the principal. Many people fall into a trap where they make partial repayments that do not cover the interest, and the debt begins to grow instead of shrink despite making consistent good-faith payments. This is how you come across nightmare stories where a person pays for years and yet their loan amount never goes down or doesn’t go down much. Unfortunately, it’s perfectly legal for people to sign agreements that they do not fully understand and incomes in any industry or with any education are not guaranteed. So when things go wrong, it seems like the right thing to do to let people know they do not have to suffer with lifelong debt that they genuinely cannot repay. Rights don’t matter if they go unspoken and unasserted, so if you know somebody stuck in the debt spiral, let them know there’s a way out.

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