this post was submitted on 26 Dec 2023
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Life led Elizabeth Hadzic and Kim Coles to bankruptcy court.

Hadzic, 50, a psychotherapist in Maryland, doesn’t make enough to support herself and her adult son, whose health struggles set her back thousands of dollars. Coles, an accountant in Oregon in her late 60s, was laid off last year.

Both have tens of thousands of dollars in student loan debt. Although they have been making payments on those loans for years, they no longer can. And both, in the absence of an alternative, have resorted to taking the costly, typically unsuccessful route of trying to get their loans discharged in bankruptcy court.

That’s where things diverge.

For Hadzic, bankruptcy is proving to be the answer to her financial woes. After months of litigation, she’s on track for a full discharge. In Coles’ case, the government is putting up a fight − though she is of retirement age − against discharging the balance of a loan she’s been paying down for more than a decade.

“I always paid my student loans,” Coles said in an interview. “I was never late.”

The disparity in how the government is treating their cases is indicative of the intractability of one of the country’s most extreme and inaccessible forms of student debt relief, as the Biden administration grapples with finding alternatives to the kind of sweeping student loan forgiveness option that the Supreme Court struck down in June.

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[–] [email protected] 82 points 10 months ago* (last edited 10 months ago) (2 children)

When my wife and I went through bankruptcy we didn't get any student debt relief. And now the want to give people student debt relief!? That's awesome, we should be trying to help people out of debt any way we can.

[–] AtariDump 41 points 10 months ago
[–] [email protected] 33 points 10 months ago

Had me in the first half

[–] calypsopub 19 points 10 months ago (1 children)

I don't understand why the government can't at least offer everyone the opportunity to refinance at zero interest so they can get those private debts paid off.

[–] june 21 points 10 months ago (1 children)

Especially for government owned loans. It’s always been bizarre to me that I pay interest on my federal student loans. My education makes me a huge contributor to the economy already, why do I need to pay back 2-3x my tuition over the term of my loans too?

[–] Kalysta 10 points 10 months ago (1 children)

Because they’re considered safe loans because they are very hard to discharge. So your student loans are funding your parent’s pension funds and 401k’s

[–] NoSpiritAnimal 5 points 10 months ago

Isn't it that the companies overseeing those pension funds and 401ks have given out that money as risky loans because they had the promise of being able to create a generation of debtors by going into schools and targeting children for predatory interest rates?

[–] MSids 6 points 10 months ago (4 children)

I am on board with cancelling some student debt for those who are struggling, but I wonder if this is a good long term solution. How do we stop getting overburdened graduates into the debt machine at 22? Do we lower tuition costs, make college free, talk kids out of going, giving more government grants to low income students?

If the taxpayers are going to socialize anything I'd prefer to start with healthcare. That impacts everyone.

[–] Kalysta 13 points 10 months ago (1 children)

You can socialize more than one thing at a time. Student loan debt affects everyone too. We have an entire generation right now who can’t afford to buy a house, and who are putting off marriage and having kids. That effects the entire economy. Not to mention they can’t save for retirement if a good chunk of their income is going into student loan debt.

[–] MSids 3 points 10 months ago* (last edited 10 months ago)

A few counters to this:

Given that public opinion weighs so heavily on the ability to get anything done, healthcare, to me, seems like an easier win. Focus on one thing, get it done right, make people happy, get elected to a second term.

Student loans do not affect everyone. College attendance is declining and nobody ever dies from not having a bachelor's.

Home prices and interest rates are out of control, but neither has anything to do with student loans. Home prices have risen at way beyond inflationary rates to beyond what is affordable even for those without debt. Other factors are at play here.

[–] [email protected] 7 points 10 months ago (4 children)

Stopping the student loan program would be a good start. It would cause some people to not be able to go to college, but it would likely save far more from a debt trap. Stopping loans would also apply a huge downward force on tuition, which may actually help more people afford to go to college in the first place.

Maybe after a few years of no loans, a grant system could be created. It would pay participating universities directly, if they agreed to some level of affordable tuition. You could tie additional grant money to performance objectives that are harder to game like graduation rates, job placement, average salary of recent graduates, and performance of the bottom quintile.

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[–] [email protected] 6 points 10 months ago (1 children)

Healthcare is a good start, but education is the biggest investment we can possibly make. Why not both, though? The money exists.

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[–] time_lord 2 points 10 months ago

Pre George W. Bush, it was perfectly legal to discharge student debt in bankruptcy. That made loans harder to get, and consequently, kept college prices from these insane increases.

[–] Arthur_Leywin 2 points 10 months ago

Does anyone know how they plotted that "Student loan debt" graph? Looks nice.

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