Bankruptcy for Student Loan Debt?

It has been said that bankruptcy should be allowed for student loan debt.   When I first heard this, I was not sure what to think.   However, as time passed by and I started to think of the situation regarding student loan money being granted to individuals and how this debt plagues some very hardworking people, I started to understand the case for allowing students to declare bankruptcy in order to remove their student loans.

People go to college, generally, to gain the skills to enter the workforce.  Some individuals go to college for seven years or more.   This is the case with law students.  However, due to the current economy, many law students are finding that there are no jobs for them.  Yet, what is there for them is six digit student loan debt.  Furthermore, many students were sucked into the higher education system as a result of being told all their lives that college was not an option, but a necessity.  That in order to be even remotely successful in life, you need a college education.

Sadly, many students are finishing college, expecting to land a good job that allows them to be a productive member of society and reap the rewards for their labor.  However, many students will never have home ownership (or will have to defer it) or will not be able to secure credit for their own business.   Many will be stuck with a very limited income after college, barely able to pay back these massive loans.

Many people go to college in order to do something better with their lives.   The opportunity cost of college is high.  One must defer the earning of income in order to attend college.  This income could be used to pay for a down payment on a house, to start a new business, or to be invested towards retirement.  The person who does not choose college will not have to worry about student loan debt. The person who goes to college feels that he or she is making a responsible choice.  A choice that will benefit them and their family in the years to come.  However, upon graduating, many students are inundated with student loan debt (some also have credit card and other debt, which I will ignore here). This debt is often crippling.  The student can try to enter the workforce with their college degree, but often they will realize that the jobs are just not there.   Therefore, the graduate schools make their siren calls, offering the life of glitz and glamor.  Come continue your education, and reap even greater rewards than your peers.   Young men and women fall for this.   Our parents, teachers, and the rest of society tells us that this is the right choice.  More school is always good.   The more education you have the better off you will be.  However, the reality is, if you can not find work, you will only be in more debt.

Six figure debt is said to be life crippling.  Many people have years of depression ahead of them when they realize that the rest of their youth will be spent trying to pay off this debt instead of doing the things, such as starting a family, buying a home, starting a business, etc. etc. that their less educated friends are able to do.   They were told to go to college, that it was the responsible thing to do, and in the end their reward is a life of desolation.  And they are told, unlike their less educated counterparts, that they can not discharge that debt.  They are told that, even though they worked for years on getting a degree, that the debt is there to haunt them for the rest of their life.

Some individuals are unable to pay such debt, and are saddled with extra payments.  Payments that spiral out of control due to compound interest.  Other individuals flee from the United States, feeling that the only way to escape the debt is to leave their homeland behind.  They become known as the student loan debt pariahs.

One reason that this debt has got out of control is that student loan amounts have grown like crazy.   A person should not be allowed to take out over $200,000 in loans for higher education.   In fact, an individual should not be allowed to take out over $100,000 in loans.  Why?  Because when the loan rates are increased, the tuition increases in step with it.  In fact, college tuition has risen faster than the cost of medical care, yet which of the two gets the most media attention?  Most of the college students I have spoken to have no idea how fast college tuition increases!

The higher education system is one of the biggest businesses in the United States.  It is truly a business in every sense of the world. Ride the New York subway system and see the trains plastered with ads from schools you have never even heard of.  Watch television and see advertisements from multitudes of schools.   Drive around the country and see billboards advertising colleges.  Anyone can join now, thanks to the ease of student loan debt.  If student loan debt was capped, the schools would be forced to reduce their tuition.   Society now thinks that education is a right for all, and people would be angry at the idea that their kids could not go to college, so schools would be forced to reduce their tuition in order to allow everyone to go to college.  To have to pay $40-50,000 for a year of education is ludicrous.  As I said in a previous post, one could go from New York or Los Angeles to Cancun or another tropical locale for the same price as a week of class at some schools.  It truly is out of control.

Well meaning parents tell their children that they have to go to college.  They give up much time that they could be earning money in order to learn to be a better member of society.  They are told what they are doing is great.  Their families celebrate their choice.  They endure 4-7 years of higher education, and then, as a result, are not able to partake in the joys of humanity.  There is something wrong with this picture.   I say let there be some kind of bankruptcy protection for student loans. Maybe after five years.  If a person is unable to find work, why should they be a slave to debt for the remainder of their life?  Why should a well meaning individual not be able to partake in the ability to own a home or start a business?

I say this, because I imagine I will never own a home or property.  At one time I thought I would, but now I realize that the course I have chosen will be to my detriment.   I don't know if I would file for bankruptcy if given the choice, I have come to terms with the reality of the situation and use this blog to warn others and to express myself.   While there is a stigma with filing for bankruptcy, there are some cases in which bankruptcy for student loans is necessary.  Why should the college graduate who worked hard for almost a decade be told that he can not file for bankruptcy, when the higher education system is to blame for the insane and out of control prices of college and graduate school?

A Trip to the Psychiatrist: Session I

It's so expensive these days to afford a psychiatrist or counselor, especially when riding over $100,000 of student loan debt. So I thought I would be my own counselor, as it's not too hard to figure out what they would ask you, and the answers are all up to me anyway.   So I am going to write about my feelings and thoughts here, as if I was talking to a real psychiatrist.
 
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Psychiatrist: How are you today?

Me:  I’m having a more ‘positive’ day.  There was no law school classes today, spring break is around the corner, and afterward it’s all downhill on the way towards summer.  Well, I still have to find a summer job, and I am going back home for the first time since starting law school, and frankly, I’m a bit nervous about that.

Psychiatrist:  I see.  What makes you nervous about going back home?

Me:  Well, my parents think I am going to be a rich lawyer, but not all lawyers are wealthy.  Many are actually deep in, as a fellow scamblogger would say, NON-DISCHARGEABLE student loan debt.  They seem to have watched a butt ton of Perry Mason and similar shows and have based reality around television.

Psychiatrist:  That sounds like psychiatrists.  I am very lucky to have this job. 

Me: Well, you only have a job inside of my mind.  Furthermore, what really irks me about it is that my parents are divorced and live in opposite sides of the state, so when I go back I have to explain the law thing twice and they may think I don’t know what I’m talking about.

Psychiatrist:  How does that make you feel?

Me:  Not too good.  I try to not think about it, as I won’t be going back until May, so I have time to get myself prepared for it.  And finals.  And find a summer job.  And figure out what to do after graduating.

Psychiatrist:  Do all law students feel this way?

Me:  No, not at all.  Some are excited to be there.  In 1L law students are like children, playing with color highlighters and trying to appear smarter than their peers.  They are all fighting for the top grades and play a game of seeing who can talk the most in class.  In 2L the students realize that they are in deep now and the color highlighters are not as appealing.  In fact, by that time they are sick of carrying the books and say ‘screw the highlighters’, highlighting instead in pen or not reading much at all.  I don’t know much about 3L, but I would imagine it has something to do with those suicide cards I keep seeing around my law school.

Psychiatrist:  Whoa, back up.  Suicide cards?  

Me:  Yeah, there’s these little cards around in envelopes about the signs of suicide.  I have not heard of anyone in my class doing it, but it’s obviously a concern.  I think I put one of those cards in my wallet actually.  You know, to have a jump on 3L.

Psychiatrist:  Earlier you said you were having a more ‘positive’ day today.  Tell me, what is a more ‘negative’ day like?

Me:  Well, I skip class, figuring ‘what’s the point?’  Then a few hours later, when I realize class was going, I feel like an idiot.  I wonder what I am missing, if something I missed will be on the test.  I think of how much I am paying per class, it’s a few hundred dollars probably.  I mean, if I paid for a plane ticket to Cancun, which is about what a day of law school costs, would I just skip it?  I think not.  

Psychiatrist:  I can see why you would be upset.  Anything else?

Me:  Well, on those days I find myself looking at the job sites, wondering if I could find a job outside of the law.  I sometimes send a few e-mails out and maybe a resume or two, but then I ask myself if I would skip class to go to an interview, and what would I say?  Would I say I am in law school?  Would I say I am dropping out or plan on dropping out?  What would I say I did for the last couple years if I didn’t say I was in law school?  I then feel like I really should have went to class.  

Psychiatrist:  When was the last time you missed a class?

Me:  Over a week ago.  

Psychiatrist:  How does that make you feel?

Me:  A bit better.  In a way.  I still wonder what the point is, sometimes.   I just sit there in some of my classes and wonder what the point to all this stuff is.  I mean, sometimes I read the books and there is this long case.  I read it and try to understand it.  I try to go through it slow, taking in the law like a man takes in a good looking woman.  I mingle the thoughts around in my mind, feeling real good because I am learning stuff and I feel I can use this information on the next exam.  Then I write all that stuff down in my notebook, all the rules and stuff.  Then, I read on and at the end of the case, in the notes, it says the case was overturned.  I wonder why the hell I had to read that long case if it was just overturned in the end. Furthermore, the book doesn’t say why exactly the case was overturned, so I am thinking ‘what the hell is the point of all this stupid theory?’  I want to learn how to file a lawsuit, and I don’t mean civil procedure cases.  I want to learn how to physically do a case.    

Psychiatrist:  I can imagine so.  Maybe one day the law schools will learn that they need to teach you all more hands on.  Kind of like how a dentist learns dentistry or a brain surgeon learns surgery. 
 
Me:  That would be nice.  But then I wonder, why not now?  What am I paying for?

Psychiatrist:  Well, maybe you could be a professor and teach that same kind of theory.  Maybe you learn the good stuff when you go for an LLM?

Me:  That’s just another big scam.  It’s another two years of the same theory.  If you want to learn the real law you have to get a job, but those are scarce. 


Psychiatrist:  You are in a world of hurt.  Why did you go to law school again?

Me:  I figured it would supplement my degree nicely and make me a powerhouse in the working world.