GOOD

A Legal Genius May Have Found A Way To Make Your Student Debt Disappear

It’s never too late for loan forgiveness

America’s student debt crisis reached a new record-high in 2017, with a total balance of $1.3 trillion among 44 million borrowers—17 million of which are under the age of 30. It’s hard enough to pay the bills in your 20s. The addition of a few hundred dollars to your monthly payments can break your bank account. And for many millennials, it has; the majority have missed a student loan payment to cover basic needs like groceries and rent.

Which is a big problem, since unlike most other debt, such as car loans, mortgages, or credit cards, declaring bankruptcy with student loans isn’t an option. That’s thanks to a 1978 law passed in reaction to a wave of students trying to declare bankruptcy upon graduating. The law, which made federal student loans nondischargeable in bankruptcy, still stands today—and now includes private loans as well—making it extremely difficult for debt-ridden individuals to bring their heads above water.


Fortunately, there’s a movement growing among lawyers across the United States who want to challenge these decades-old bankruptcy laws to reflect today’s economic reality. New York City-based attorney Austin Smith became one of them after he discovered a loophole in bankruptcy code a few years ago. With the current law, the only way student debt can be waived is if a borrower proves that repaying a loan would cause an “undue hardship”—an extremely vague, yet inordinately hard legal standard to meet. But, Smith found that in many cases, the courts had historically misinterpreted the laws, falsely deeming student debts as student loans under the bankruptcy code.

[quote position="full" is_quote="true"]These are the people the bankruptcy laws were designed to protect.[/quote]

Smith’s first client was a law student who’d accrued $15,000 in debt from studying for the bar. The bank immediately classified her loan as a student loan because she was studying, but she wasn’t actually affiliated with an academic institution at the time. Going off the bank’s classification, the court deemed her debt nondischargeable. Smith, however, was able to prove that her loan wasn’t technically a student loan under the bankruptcy code and therefore could be erased.

Smith’s logic can be applied to other private lender cases as well. For example, if someone took out a loan for more than the total cost of tuition, their debt could be discharged. The same applies for people who were attending unaccredited trade programs, like career training, K-12 education, as well as nonaccredited colleges and universities. Though most people with student debt have federal loans, a growing number are taking out loans from independent companies, which often have even higher interest rates. At the end of last year, private loans made up roughly 8 percent—or $102 billion—of all student loans.

“This won’t solve the whole student debt problem,” Smith admits, “but it will provide relief to the few million people who are really struggling. These are the people the bankruptcy laws were designed to protect.”

Smith has won 9 cases across New York, Texas, Minnesota, California, and Connecticut and is working on dozens more. His latest, a class action lawsuit against Navient, one of the largest student loan companies in the United States with 12 million accounts, was his biggest yet. And though the case isn’t over, Navient has already agreed to stop collecting debt from people who’ve filed for bankruptcy after 2005. If Smith wins this case, as many as 16,000 people could be relieved of their debt.

“You talk to these people and they are just at their wits’ end,” Smith says. “All of their money is going to interest and they are left without any options. Bankruptcy is supposed to be the last option.”

Smith isn’t the only one starting to challenge bankruptcy code when it comes to private student loans. Other lawyers are beginning to follow suit. Already, in the past 15 years, the number of bankruptcy filings that included student debt has grown more than 7 percent. And now, Smith is hoping to increase that number by even more. He’s partnered with the bankruptcy software company Best Case to utilize some of his same logic. Set to launch next week, the new software will help attorneys determine whether a client’s loans qualify for bankruptcy discharges and, if they do, show them how to challenge the debt.

“There needs to be a safety valve,” says Smith. And slowly, as more and more lawyers begin to challenge private loan companies and the historical interpretation of bankruptcy law, that safety valve will be built, giving hope and solace to a few of the millions struggling to pay off their student loans.

Money
Julian Meehan

Young leaders from around the world are gathering at the United Nations Headquarters in New York Saturday to address arguably the most urgent issue of our time. The Youth Climate Summit comes on the heels of an international strike spearheaded by Greta Thunberg, the 16-year-old climate activist from Sweden, who arrived in New York via emissions-free sailboat earlier this month.

Translated from Swedish, "berg" means "mountain," so it may feel fated that a young woman with Viking blood in her veins and summit in her name would be at the helm. But let's go out on a limb and presume Thunberg, in keeping with most activists, would chafe at the notion of pre-ordained "destiny," and rightly so. Destiny is passive — it happens to you. It's also egomaniacal. Change, on the other hand, is active; you have to fight. And it is humble. "We need to get angry and understand what is at stake," Thunberg declared. "And then we need to transform that anger into action."

This new generation of activists' most pernicious enemy is denial. The people in charge — complacent politicians and corporation heads who grossly benefit from maintaining the status quo — are buffered from real-life consequences of climate change. But millions of people don't share that privilege. For them, climate change isn't an abstract concept, but a daily state of emergency, whether it comes in the form of "prolonged drought in sub-Saharan Africa…devastating tropical storms sweeping across Southeast Asia, the Caribbean and the Pacific…[or] heatwaves and wildfires," as Amnesty International reportsare all too real problems people are facing on a regular basis.

RELATED: Greta Thunberg urges people to turn to nature to combat climate change

Keep Reading Show less
The Planet

Millions of people in over 150 countries across the globe marched for lawmakers and corporations to take action to help stop climate change on Friday, September 20.

The Climate Strikes were organized by children around the world as an extension of the of the "Fridays for Future" campaign. Students have been walking out of classrooms on Fridays to speak out about political inaction surrounding the climate crisis.

"We need to act right now to stop burning fossil fuels and ensure a rapid energy revolution with equity, reparations and climate justice at its heart," organizers say.

There's no doubt the visual images from the marches send a powerful message to those on the ground but especially those watching from around the world. GOOD's own Gabriel Reilich was on the scene for the largest of the Climate Strikes. Here are 18 of the best signs from the Climate Strike march in New York City.

Keep Reading Show less

September 20th marks the beginning of a pivotal push for the future of our planet. The Global Climate Strike will set the stage for the United Nations Climate Action Summit, where more than 60 nations are expected to build upon their commitment to 2015's Paris Agreement for combating climate change.

Millions of people are expected to take part in an estimated 4,000 events across 130 countries.

Keep Reading Show less
The Planet
via Apple

When the iPhone 11 debuted on September 10, it was met with less enthusiasm than the usual iPhone release. A lot of techies are holding off purchasing the latest gadget until Apple releases a phone with 5G technology.

Major US phone carriers have yet to build out the infrastructure necessary to provide a consistent 5G experience, so Apple didn't feel it necessary to integrate the technology into its latest iPhone.

A dramatic new feature on the iPhone 11 Pro is its three camera lenses. The three lenses give users the the original wide, plus ultrawide and telephoto options.

Keep Reading Show less
Health
via I love butter / Flickr

We often dismiss our dreams as nonsensical dispatches from the mind while we're deep asleep. But recent research proves that our dreams can definitely affect our waking lives.

People often dream about their significant others and studies show it actually affects how we behave towads them the next day.

"A lot of people don't pay attention to their dreams and are unaware of the impact they have on their state of mind," said Dylan Selterman, psychology lecturer at the University of Maryland, says according to The Huffington Post. "Now we have evidence that there is this association."

Keep Reading Show less
Health