Behind the curtain of student loans
Last month, a former law student won a bid in bankruptcy court to discharge nearly $340,000 in education debt because her diagnosis of Asperger syndrome rendered her unable to repay the loans. The U.S. Bankruptcy Court for the District of Maryland found that Carol Todd, who attended (the University of Baltimore School of Law, met the difficult burden of showing that she would suffer undue hardship if forced to repay her debt. Todd received her high school GED during the late '80s, at age 39. She received an associate degree at Villa Julie College (now Stevenson University) and a bachelor's degree at the College of Notre Dame of Maryland (now Notre Dame of Maryland University). She began attending law school in 1992 but did not complete the program. She went on to obtain a master's degree from Towson University and a Ph.D. from an unaccredited online school in 2007. She filed for Chapter 7 bankruptcy in 2009. Todd pursued success in education "as a stepping stone toward a measure of liberation...to help her achieve something closer to a normal life." Carol’s case is a rarity. The difficulty of proving undue hardship —the majority of claims are unsuccessful — and of discharging student loans has prompted the National Association of Consumer Bankruptcy Attorneys to call on Congress earlier this year to pass legislation that would allow graduates to discharge loans taken out from private lenders, including for-profit companies such as banks and student loan behemoth Sallie Mae. Similar legislation has been submitted over the past two years by Congressional Democrats without making much progress, but NACBA holds hope that this will change soon. While Todd's story raises questions about undue hardships to borrowers due to a permanent mental disability, what does this mean for any changes to legislation when it comes to a borrower who suffers a permanent physical disability that ultimately prevents him or her from holding down a stable job to pay off student loans? Will Carol's court decision cause lenders to increase scrutiny on prospective students with disabilities? What if the borrower is the victim of a tragic accident that leaves him in a coma? What happens when the borrower dies, but has a parent co-sign the loan?