Responsibility=don't go to college if you're poor, or don't get sick?

[AlienGirl]

Kid from a poor family runs up student loans, then gets chronically ill. Can't be employed because nobody wants to hire someone who is going to be sick about seven days out of every month. Goes on Social Security as disabled. Can just barely afford medicine on what she gets.

Where was she irresponsible--by going to college, despite being born poor? Or by becoming ill? Maybe by being born to a poor family in the first place?

Should she just go off and die, relieving the taxpayers of the burden? 'Cause that's what happens if she can't get her medicine and other treatments, which the checks are just barely covering, and which the checks will no longer cover once the Department of Education gets their cut.

Tucker

[northzax]

1. you know, I have a good friend

who lost her job for a long time, and was on the verge of being homeless. She called her student loan provider, and they put the loans in abeyance, without interest, for 36 months to give her a chance to get back on her feet.

almost every creditor will work with you, but you have to talk to them, and this holds doubly true for federally guaranteed student loans.

but if you ignore them for two decades, they're gonna get pissed off.

[AlienGirl]

3. They will put loans in abeyance and such for only so long

Eventually the periods of forbearance will run out, and the ruling that allowed the garnishment of social security money opens the door for exactly this situation. Why would they *not* use the opportunity to squeeze a little bit out of someone, rather than keep them in forbearance? The goodness of their hearts?

Tucker

[northzax]

11. so declare bankruptcy, if you can't pay your debts ever

Federally guaranteed student loans are not protected in bankruptcy when they represent an 'undue hardship' on the borrower or her/his family. check out the existing precedent most bankruptcy courts use, it's called the Brunner case:

<3> As noted by the district court, there is very little appellate authority on the definition of "undue hardship" in the context of 11 U.S.C. § 523(a)(8)(B). Based on legislative history and the decisions of other district and bankruptcy courts, the district court adopted a standard for "undue hardship" requiring a three-part showing: (1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans. For the reasons set forth in the district court's order, we adopt this analysis. The first part of this test has been applied frequently as the minimum necessary to establish "undue hardship." See, e.g., Bryant v. Pennsylvania Higher Educ. Assistance Agency (In re Bryant), 72 B.R. 913, 915 (Bankr.E.D.Pa.1987); North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235 (Bankr.D.Minn.1986); Marion v. Pennsylvania Higher Educ. Assistance Agency (In re Marion), 61 B.R. 815 (Bankr.W.D.Pa.1986). Requiring such a showing comports with common sense as well.

so if you have made a good faith effort to repay your loans in the past, and you cannot (and any court would call permanent disability and sole source of income being Social Security as an undue hardship) you can discharge them in bankruptcy. That's what it's there for.

[AlienGirl]

15. I have never heard of student loans being discharged in bankruptcy.

[MercutioATC]

20. They're not.

Bankruptcy doesn't get rid of student loans or federal income taxes owed.

[northzax]

did you read the case I cited?

Brunner v. New York? where Federal Student Loans were discharged after a demonstration that they would cause undue hardship?

on edit: this particular case did not result in discharge, but the court explains the reasons she didn't meet the test in the final paragraph:

<4> Under the test proposed by the district court, Brunner has not established her eligibility for a discharge of her student loans based on "undue hardship." The record demonstrates no "additional circumstances" indicating a likelihood that her current inability to find any work will extend for a significant portion of the loan repayment period. She is not disabled, nor elderly, and she has--so far as the record discloses--no dependents. No evidence *397 was presented indicating a total foreclosure of job prospects in her area of training. In fact, at the time of the hearing, only ten months had elapsed since Brunner's graduation from her Master's program. Finally, as noted by the district court, Brunner filed for the discharge within a month of the date the first payment of her loans came due. Moreover, she did so without first requesting a deferment of payment, a less drastic remedy available to those unable to pay because of prolonged unemployment. Such conduct does not evidence a good faith attempt to repay her student loans.

[MercutioATC]

25. Missed that. Good information...thanks.

[AlienGirl]

36. What do they define as "minimum standard of living"?

I am highly suspicious of the possibility of student loans being discharged; it seems to me that they can make the test for "undue hardship" so difficult to meet that it would never be done. One case I saw in a cursory web-search held that a paralyzed doctor could still work a desk job, and therefore would not suffer undue hardship. Additionally, they could just keep it in court beyond the filer's ability to pay legal fees (bankruptcy court is expensive) and wear out the filer.

Tucker

[pitohui]

41. this case will almost never be allowed to apply

you will find in practice that almost no one is allowed to discharge their student loan debts in bankruptcy no matter how many times that case is cited or how many student loan bankruptcy books are sold on nolo.com

[northzax]

49. well, here's the FAFSA page listing ways to discharge your loan

http://studentaid.ed.gov/students/publications/repaying_loans/2003_2004/english/loan-discharge-cancellation.htm

number one if permanent and total disability, which would apply in this case, don't you think? If you are on full SS disability, then the government has determined already that you are fully disabled, right?

[patcox2]

31. It does get rid of student loans in certain circumstances.

Chronic illness is a typical extenuating circumstance that will allow discharge of a student loan.

[pitohui]

42. why don't you do it and show us how?

not to be sarcastic but i have never known anyone who was actually able to discharge student loan debt because of chronic incapacitating illness

there are too many hoops and too many judges who just "know" it can't be done

[patcox2]

45. Bankruptcy judges in my experience know the code.

And if they have a bias it tends towards protecting the debtor. Of course thats just around here, I know that in other parts of the country bankruptcy judges think its their job to be disciplinarians and blame people for their poverty.

I have practiced in BR court, I am not making it up.

Hell, we used to be able to get them to issue prerogative writs to force the state to give licenses to people convicted ot DUI who hadn't paid their DUI insurance surcharges, until the Supreme Court conservatives suddenly discovered the 10th amendment lying in the back of a closet somewhere a few years ago and prohibited the BR courts from enjoining state officials.

[northzax]

23. well, I just cited a court case where they were

and that laid the standard for doing so in the future.

[Horse with no Name]

16. Filing for bankruptcy costs money

Money that poor people don't have. When you can't feed your family or take care of yourself, then bankruptcy is just one more thing you can't afford.
You get used to it when you are poor.

[MercutioATC]

4. Exactly!

Personal responsibility is a GOOD thing. People should pay their debts. School loans can almost always be put in abeyance when there are extenuating financial issues.

I think seizing SS payments to cover defaulted school loans is a perfectly fine idea.

[AlienGirl]

6. Abeyance always runs out, eventually. nt

[MercutioATC]

10. So, what's a fair solution?

If you took a loan against your pension and didn't pay it back, wouldn't you expect your pension to be reduced by the amount of the loan (plus any interest due)?

That's essentially what's happening. A person takes a loan from the government. At some point, they'll get a "pension" from the government. If they haven't paid back their loan, the government reduces their "pension" benefits to cover the loan.

[AlienGirl]

13. There is none--life isn't fair

[MercutioATC]

18. Kinda my point...

Neither option is great, but I don't see scrapping the whole idea for a few extreme cases.

[AlienGirl]

19. If you were an "extreme case" you might feel differently.

[Selatius]

30. The best solution is something like this:

Set goals to reduce the class sizes down to tolerable levels. We need more qualified teachers with better pay. We need to reinvest in education infrastructure and update it to match the best education systems in the world. We will use the top performing schools in the world as benchmarks.

We then need to increase education standards across the board. They need to be drastically improved in order to match the best in the world.

Once that is accomplished, the student loan program will be replaced with the Pell Grant program entirely. Students who fail to make the grade to go to public universities can be offered alternatives such as vocational/trade schooling instead.

[MadMaddie]

2. Compassionate Conservatism at it's best!!

:sarcasm:

[LisaLynne]

5. Another aspect of it to me is ...

that going to college anymore doesn't equate automatically with getting a good job. It's no guarantee, but it's still almost the only thing you can do to even have a hope of getting out of a minimum wage rut. So, a lot of people -- single moms, etc -- take out loans to go to school, hoping for a better life and then, once they have all these debts, find out that the jobs just aren't there, as they were promised. I can see how some people are not able to pay back their loans and I don't think it's all about being irresponsible. I was very lucky to end up with a decent job after college but it still took me years to pay back the few loans I did have.

[Selatius]

7. She was irresponsible for taking loans in the first place.

She could've easily gone and applied for numerous private scholarships instead. Of course, if she isn't that smart of a student and can't get too many merit-based scholarships.........tough shit. Your fault for not applying yourself.

Hey, I'm just saying what a Republican would say.

You don't like our system? Then go to Europe. At least they care enough about education to have some of the best education systems in the world where one doesn't have to rack up 100,000 in student loan debt because they went to some of the best schools in the country. :sarcasm:

[AlienGirl]

9. Or she could have known her place, and not gone to college

Or been prettier and able to marry well...

[rinsd]

8. Where has anyone said no exceptions for hardship....

...what most people were saying on the other thread that not paying back your student loans fucks over other people and is incredibly irresposible(exempting extenuating circumstances) and why should you enjoy one perk of society when you have abused another. Note the keyword is abused, not hardship circumstances.

Here's another example, Joe Schmoe comes from a middle class family. To make himself more viable for government loans, he has himself emancipated from his parents so their income will not be looked at when considering his case for grants and such. Joe gets into an expensive private school. Government foots most of the bill via student loans. Joe graduates and gets a good job. At first he is rather dilligent in paying back his loan, he even enjoys the tax write off but then he gets lazy. He doesn't bother sending in his payment as that money is used for the weekend ventures to the bar. He works very hard and for a long time. He retires with a decent set aside which the government adds to even though he still owes the government thousands of dollars.

[AlienGirl]

12. Hardship exemptions are never permanent

They will eventually run out. It is in the student loan industry's best interest to take whatever they can out of the social security checks that are now fair game, and they sure as heck aren't going to refrain from doing so out of altruism.

Tucker

[sui generis]

14. Actually we know this in the gay community

Especially from years ago before successful long term treatment. Some kid gets sick, is expected to live in poverty on disability or else pay back their loans. Employers won't hire someone who has a student loan in default, and often times won't keep someone hired once wage garnishment begins. Without employment, no insurance. Without insurance they pay market rates for everything - until they're out of money or dead.

She needs to request a forgiveness or abatement of debt based on medical hardship - they'll have her doctor fill out a bunch of paperwork, but I understand they sometimes do it out of compassion. They will keep checking with her doctor every couple of years though if it's just an abatement. If she miraculously improves, they'll come back and take her to the cleaners, with penalty and interest - they're really nice about that. The downside is that she basically has to do a voluntary waiver of HIPAA protections, and give them access to her bank account, and I have heard horror stories of people just getting their bank accounts randomly drained even making regular payments.

She also needs to keep at it and don't get disheartened by the first "no" - often times the USDE uses third party collections agencies who really aren't allowed to give her an opinion or a decision, but will pretend like they can.

The bigger problem is that our society expects people who are sick to be too sick to work, even if working is the only way they can afford to stay alive. They expect not to have to insure anyone who is sick or to pay for their treatments and anyone who is on disability who actually earns enough to pay for medicine or a medical emergency gets kicked off of disability.

The government also expects that everyone's family and friends are responsible for helping to pay for treatments that they won't pay for, yet allocate those payments as ordinary income to the recipient.

It is profoundly shameful - we expect people who are already facing the biggest battle in their life to be good little sick people and not disappoint us by actually surviving.

Compassionate conservatism at its finest.

[AzDar]

17. Are student loans the only loans collectible no matter WHAT the

circumstance? I knew they couldn't be dismissed through bankruptcy, and now, apparently, there is no 'statute of limitation' for collection..why student loans? Someone trying to keep anyone other than the independently wealthy from getting an education?
Now WHO would DO such a thing? And WHO would profit?

[Selatius]

21. Student loans are a lucrative industry for banks.

You NEED to read this:

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1409197

[AlienGirl]

22. Yes. However, they go away at death

The estate is not charged.

Tucker

[sui generis]

24. well collections agencies for one thing

discounted student loan debt is a reliable, if somewhat niche client/investment, and they don't actually get to "own" the notes or the risk.

Statute of Limitations does not apply to federal debt of any kind. Unfortunately when they owe you, you have only three years to claim it or lose it.

[bleedingheart]

27. ask your federal representatives why it is set up that way.

it has been that way for a long long time.

I know a fellow who had his IRS refund taken because his wife failed to pay her student loans, meanwhile she and he were both working. She had moved multiple times and didn't get anymore notices so she thought the goverment couldn't find her. Duh...they trace that stuff on your social security number and voila...their joint return is how she got found...and how they got some of the cash.

[Horse with no Name]

33. It makes me wonder

There WAS a time that student loans were dischargeable by bankruptcy.
It's been in the last twenty years that they have changed.
I wonder if the people who claimed them in their bankruptcies are going to be hit with them when they file SS.

[MercutioATC]

35. No, because that debt was discharged by a federal court.

It doesn't exist any more.

[AlienGirl]

38. I wonder how the bankruptcy "reform" bill affects this

[sandnsea]

46. It doesn't, not one bit

It's been this way for student loans for a very long time now. I find it peculiar that people who rail against the bankruptcy bill don't understand that the exact same financial conditions lead to student loan defaults.

[bleedingheart]

26. There are programs to help people who are poor and sick

1. If you are too poor to pay back a student loan, you can get the payments deferred or reduced.
2. If you are poor and sick, you will more than likely qualify for state medicaid and welfare services.
3. If you are so sick that you are unemployable, then you can apply for disability.
4. If you are really in a shitter, there are tons of agencies that can help you apply for aid and even provide aid. In addition, each citizen should know that they have the right to contact their elected officials for help. I am betting that if you have a really bad disease you can eliminate your student loan debt.

No one wants people to curl up and die and relieve the tax burden...BUT no one wants to see cheating either. The student loan program did not exist in my mother's era. She would have given her right arm to have gotten a college education but it was out of her reach. We are very very lucky to have such programs, but if a lot of people start defaulting then politicians will use that as an excuse to cut the programs entirely.

In reality I find that a lot of people ignore their problems until they become so big and so unmanageable that they eventually overwhelm them. I have helped friends and family resolve problems with the IRS, the student loan agencies, and even medicaid...all of those problems were resolved very nicely by dealing with the problem quickly rather than ignoring it.

[northzax]

32. you can discharge your loans in bankruptcy IF

you can prove that paying them would cause undue hardship and you have made a good faith effort to pay in the past. Check out the decision in Brunner V. New York I cited above. it's the people who simply ignore them and hope they'll go away who get into trouble.

[pitohui]

44. as i said above, you do it and show us how

there are many programs on paper that don't seem to exist in practice

[bleedingheart]

51. I have done it and so have other people I know...

A woman that works with my son (he has an autistic disorder) has deferred her student loans because she does not make enough money. She simply called the agency, they sent her the forms and her payments were deferred.

When I got out of college I deferred my payments for 6 months until I got a job.

My cousin had Lupus and could barely work, my mother helped her fill out the forms for federal disability and to help her get medicaid...made a big difference for her.

[sandnsea]

53. Hmmm

And what's your cousin with Lupus supposed to do if she's never able to work again? And what of the woman with the autistic child, what if she has to take care of that child forever and is never in a position to start making payments? Surprise, they take it out of her social security check, even if she's still trying to take care of her grown child. It's just wrong.

[bleedingheart]

59. my cousin is on permanent disability with Lupus

she will die of the disorder. She gets disability and was lucky to inherit her parent's home after they died. She has no mortgage and lives in a low tax area. She worked all her life and paid into the social security system before her illness.

I am the one with the child who has an autistic disorder. The woman who works with him is a younger person who has been unable to get full time work in her profession. She has had deferments and limited payments for 4 years.

[AlienGirl]

55. Those are deferrments, and they are temporary. nt

[catmandu57]

28. If we are talking about the recent sc case

What that case was about was the ten year limit on debt collection, the sc ruled that loans older than ten years could be collected on.
Social Security was always subject to an offset to pay a student loan, SSI however, that is a different subject.
SSI can't be collected on, it is in essence federal welfare and can't be touched, don't worry about it unless part of your income comes from straight ss benefits.

[MadHound]

29. Hey, how about the poor kid goes to school part time

Works full time, takes six rather than four years to get through school, sans loans, and doesn't owe anybody anything? Then if they get sick or injured, they don't have that debt. hanging over their head. And if they don't get sick or injured, well hey, they still don't have that debt hanging over their head.

Been there, done that, and guess what, I was homeless at the time of enrollment.

And like others have said, on the other thread there is nobody, including myself, who isn't stating that there shouldn't be a hardship clause in the program.

[sandnsea]

47. Mine works FULL time

Or what passes for full time these days. Between July & Dec, he earned $5,000. You try to go to school on that, especially when you have to drive 60 miles for half your classes, even when you're going to the local community college.

[MadHound]

48. Like I said in my previous post

Been there, done that, except I didn't just work July-Dec, I worked forty hours plus/week, year around, and generally took 8-10 hrs of classes each semester. No, I did have to drive so far to attend classes, but then again, I didn't have a car either. I lived, worked and attended classes all in the same town. It was, after all, all I could afford.

[sandnsea]

50. We don't have that option

You can take your first couple of years locally, but at some point, kids here have to either go to the main community college campus to finish up, or transfer to a state college. And forget about even trying to live on your own and pay your way through school, not possible. I really think you don't know what the hell you're talking about.

He is still working, by the way. I was just pointing out what was earned over a period of the 6 months after he started his job last year. And that, most of the time, you can't even get 40 hour jobs these days.

[bleedingheart]

52. I worked 35 hours a week while attending college full time

I still had loans...I used the money I earned to pay rent, books and food stuffs..

I worked all the crappy shifts no one wanted and got the hours I needed to still eat and go to school.

[Ksec]

34. And dont bitch when yer job gets outsourced- do it for the good of

Amerikkka. Accept your low wage job and salute the flag. When you get sick, suck it up for Amerika. Take yer high school education and be happy. Take joy that you live in the great Motherland.

[proud2BlibKansan]

37. My friend was in school on scholarship and loans

and got so sick she almost died. She was in the hospital for over a month. She missed an entire semester. When she was ready to come back to school, she found out she had lost both her scholarship and her loans since she had missed a semester. She was able to appeal and ended up at a hearing with a bunch of people from the university's financial aid office pouring over her medical records. A letter from her doctor wasn't good enough. They went through them, page by page, asking her intimate questions about her illness and recovery. Like they think she might have lied about almost dying so she could take a semester off?

[pitohui]

39. i agree w. you 100 percent

what makes it a double whammy is that i think being poor in childhood does have an effect on your health because it seems clear to me that people i know from the poorer backgrounds get ill much earlier and as a result often have shorter careers

these days to get a job you often need a master's degree yet i know many people disabled in their 40s and 50s and fair numbers disabled in their 20s and 30s

these short careers make it damn difficult to raise a family, buy a house, pay off student debt, and then if you get sick or injured on top of it, it's all over, you can never get on top of it

[Nikia]

40. It was my understanding for the loans from reading my forms

That Perkins loans are forgiven if you are permanently disabled. Stafford loans do not have that stipulation, but if you claim hardship they can take no more than 15% of your income which might be a hardship if you are low income and will be forgiven after 30 years of taking 15% if it is not paid off by then.
For a worse hardship, my friend who was working at a horrible but high paying job in an urban area made the decision to cash out his 401K and move to a rural area without a job. He worked on fixing up his house that he had bought and tried starting his own business for a year before he got a low paying job. For the past 5 years, he has been paying on the taxes and the amount has barely gone down. He and his wife, who both work, are now receiving food stamps and his children get reduced lunches but the government has decided to garnish 20% of their wages. Yes, he was irresponsible for not saving the money for paying the taxes, but considered it an investment in improving he and his family's lives. Student loans are an investment too in improving one's life.
Both situations suck though.

[sandnsea]

43. But it's not the Dept of Education

Most of the time it's a student loan collection business and the Dept of Education has already been paid back.

[Terran1212]

54. "Personal Responsibility" = RW talk = "Too bad you're not us!"

[ThatsMyBarack]

56. AlienGirl! Who's the birdie....?

In your avatar? :hi:

[AlienGirl]

57. My cockatoo!

Also known as "the flying toddler with pliers on his face."

Tucker

[elehhhhna]

58. All the folks who don't think they'll get/need SS wil blow off their loans

[ObaMania]

60. If she can get her condition certified by several doctors..

.. she can file total and permanent disability. 'Course this was an option years ago when I worked at Sallie Mae, and also at one of the state-run student load guaranty agencies.

Here's a list of possible deferments that the person is qualified for:

http://www.studentloan.com/slcsite/repay/defer/list.htm

The student can pretty much defer the loan for years. But unless they have it written off by the gov't (that's why the are Guaranteed Student Loans) with a total and permanent disability, it will still need to be paid at some point.