Kitroeff writes: "On a day when Democratic presidential candidates sparred
in a national debate over who would do more to help indebted students, the
U.S. government launched a new attack on student debtors seeking loan
relief."
President Barack Obama listens to senior Marissa Boles during a roundtable
discussion with students currently receiving Stafford federal student loans
at the University of Iowa in Iowa City. (photo: Chuck Kenned)
Obama Administration Hits Back at Student Debtors Seeking Relief
By Natalie Kitroeff, Bloomberg
15 October 15
The U.S. government is becoming student borrowers' worst enemy.
On a day when Democratic presidential candidates sparred in a national
debate over who would do more to help indebted students, the U.S. government
launched a new attack on student debtors seeking loan relief.
On Tuesday, the Department of Education intervened in the case of Robert
Murphy, an unemployed 65-year-old who has waged a three-year legal battle to
erase his student loans in bankruptcy.
Unlike almost every single form of consumer debt, student loans can be
erased only in very rare circumstances. Murphy's case, which is currently
being heard in a federal court in Boston, could make things a little easier
for certain borrowers. A win for Murphy would relieve him of $246,500 in
debt and could loosen the standard used to determine how desperate someone
needs to be to qualify for relief.
The court asked the Education Department to weigh in on the matter. In a
document submitted to the court on Tuesday, government lawyers urged the
federal judges not to cede any ground to borrowers who say they are in dire
financial straits. Doing so would imperil "the fiscal stability of the loan
program" that has existed for half a century. The Department of Education
did not immediately respond to requests for comment.
Murphy doesn't deserve a break just because he is 65 years old, department
lawyers wrote. Repaying his debt loan may require "that he remain employed
at or past normal retirement age," they said, even though "his income may
top out or decrease" and "further employment opportunities may be limited."
"That is part of the bargain that parents strike when they take out loans
later in their work life," the lawyers added. Murphy took out several loans
to send his three children to college, but he lost his job at a
manufacturing company in 2002 and has not been able to find work since.
No student debtor should get a break on student loans unless they can show a
"certainty of hopelessness," said the government's lawyers. "[A] debtor must
specifically prove a total incapacity in the future to repay the debt for
reasons not within his control," they added. The lawyers said that the point
of keeping such a stringent standard is to ensure "that bankruptcy does not
become a convenient and expedient means of extinguishing student loan debt."
The Education Department is seasoned at waging this particular battle. For
over a decade, the department, through its lawyers, has pushed the courts to
adopt the harshest standards possible when considering pleas from bankrupt
students.
"The general purpose of the Bankruptcy Code to give honest debtors a fresh
start does not automatically apply to student loan debtors," the
government's lawyers wrote.
Filing for bankruptcy ordinarily allows debtors to wipe out what they owe in
exchange for marred credit for up to 10 years. In the 1970s, Congress made
student loans unique. To get a reprieve on education debt, federal law
requires proof that repaying it would impose an "undue hardship."
Lawmakers have never defined undue hardship, though, so courts have tried to
work out exactly how poor Americans need to be-and for how long-in order to
qualify for student loan forgiveness.
The Department of Education has been successful at convincing judges to make
that threshold incredibly high. A borrower now has to show that making
payments on a loan would "strip himself of all that makes life worth
living," according to one court. Lawyers rifle through debtors' daily
expenses to determine whether they will be able to maintain a "minimal
standard of living" if they are required to repay student loans. Attorneys
arguing on behalf of the Education Department have called such things as
retirement account contributions, fast-food dinners, cell-phone plans, and
nutritional supplements "luxury expenses."
The government argues that such scrutiny of a borrower's financial life is
crucial for "protecting the solvency of the student loan program." Consumer
advocates say the Education Department's fears are exaggerated because most
debt that could be discharged in bankruptcy is not collectable if bankrupt
borrowers can't pay it back.
Murphy calculated that even if he were to find a job paying $50,000 per year
and then work until he turns 77, his student debt would nonetheless balloon
to $500,000.
Error! Hyperlink reference not valid. Error! Hyperlink reference not valid.
President Barack Obama listens to senior Marissa Boles during a roundtable
discussion with students currently receiving Stafford federal student loans
at the University of Iowa in Iowa City. (photo: Chuck Kenned)
http://www.bloomberg.com/news/articles/2015-10-14/obama-administration-hits-
back-at-student-debtors-seeking-reliefhttp://www.bloomberg.com/news/articles
/2015-10-14/obama-administration-hits-back-at-student-debtors-seeking-relief
Obama Administration Hits Back at Student Debtors Seeking Relief
By Natalie Kitroeff, Bloomberg
15 October 15
The U.S. government is becoming student borrowers' worst enemy.
n a day when Democratic presidential candidates sparred in a national
debate over who would do more to help indebted students, the U.S. government
launched a new attack on student debtors seeking loan relief.
On Tuesday, the Department of Education intervened in the case of Robert
Murphy, an unemployed 65-year-old who has waged a three-year legal battle to
erase his student loans in bankruptcy.
Unlike almost every single form of consumer debt, student loans can be
erased only in very rare circumstances. Murphy's case, which is currently
being heard in a federal court in Boston, could make things a little easier
for certain borrowers. A win for Murphy would relieve him of $246,500 in
debt and could loosen the standard used to determine how desperate someone
needs to be to qualify for relief.
The court asked the Education Department to weigh in on the matter. In a
document submitted to the court on Tuesday, government lawyers urged the
federal judges not to cede any ground to borrowers who say they are in dire
financial straits. Doing so would imperil "the fiscal stability of the loan
program" that has existed for half a century. The Department of Education
did not immediately respond to requests for comment.
Murphy doesn't deserve a break just because he is 65 years old, department
lawyers wrote. Repaying his debt loan may require "that he remain employed
at or past normal retirement age," they said, even though "his income may
top out or decrease" and "further employment opportunities may be limited."
"That is part of the bargain that parents strike when they take out loans
later in their work life," the lawyers added. Murphy took out several loans
to send his three children to college, but he lost his job at a
manufacturing company in 2002 and has not been able to find work since.
No student debtor should get a break on student loans unless they can show a
"certainty of hopelessness," said the government's lawyers. "[A] debtor must
specifically prove a total incapacity in the future to repay the debt for
reasons not within his control," they added. The lawyers said that the point
of keeping such a stringent standard is to ensure "that bankruptcy does not
become a convenient and expedient means of extinguishing student loan debt."
The Education Department is seasoned at waging this particular battle. For
over a decade, the department, through its lawyers, has pushed the courts to
adopt the harshest standards possible when considering pleas from bankrupt
students.
"The general purpose of the Bankruptcy Code to give honest debtors a fresh
start does not automatically apply to student loan debtors," the
government's lawyers wrote.
Filing for bankruptcy ordinarily allows debtors to wipe out what they owe in
exchange for marred credit for up to 10 years. In the 1970s, Congress made
student loans unique. To get a reprieve on education debt, federal law
requires proof that repaying it would impose an "undue hardship."
Lawmakers have never defined undue hardship, though, so courts have tried to
work out exactly how poor Americans need to be-and for how long-in order to
qualify for student loan forgiveness.
The Department of Education has been successful at convincing judges to make
that threshold incredibly high. A borrower now has to show that making
payments on a loan would "strip himself of all that makes life worth
living," according to one court. Lawyers rifle through debtors' daily
expenses to determine whether they will be able to maintain a "minimal
standard of living" if they are required to repay student loans. Attorneys
arguing on behalf of the Education Department have called such things as
retirement account contributions, fast-food dinners, cell-phone plans, and
nutritional supplements "luxury expenses."
The government argues that such scrutiny of a borrower's financial life is
crucial for "protecting the solvency of the student loan program." Consumer
advocates say the Education Department's fears are exaggerated because most
debt that could be discharged in bankruptcy is not collectable if bankrupt
borrowers can't pay it back.
Murphy calculated that even if he were to find a job paying $50,000 per year
and then work until he turns 77, his student debt would nonetheless balloon
to $500,000.
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http://e-max.it/posizionamento-siti-web/socialize