“Canceling” Student Loan Debt: A Case Study Analysis

Student-loan debt, which has totaled an outstanding $1.6 trillion in the year 2020, has garnered increased public attention, as well as turbulence for the collective 44.7 million borrowers according to a report released by Educationdata. The average amount of student debt per noncurrent student is $32,731, with average loan payments of $383 each month.

The American economy is a state of flux, which weighs a heavy burden on pre-existing debt on a citizen, especially those who are full-time students, transitioning to a young professional setting, or may even be suffering unemployment. Economic strains such as bankruptcy can stimulate a greater cause of financial hardships; however, unlike mortgages or credit card debt, student loans cannot be discharged during bankruptcy. Student loan debt should be discharged for citizens in the face of filing for bankruptcy, in order to reduce the national crisis and save future generations from financial ruin. In order to support this body of proponency, the following examines a prominent case study of past discharges, congress standards of nondischargeable student-debt in personal bankruptcy proceedings, and the Senate bill of “Fairness for Struggling Students Act”.

For the case study, Kevin J. Rosenberg, a former student, had a totaled amount of $221,400 student loan debt. Rosenberg filed for Chapter 7 bankruptcy, which states that only general unsecured debts such as credit cards and medical bills may be wiped out, in order to free himself from the financial burden of the student loans that have weighed on his back in addition to his monthly net loss of $1,500. As examined, Rosenberg was put through almost a 20 to 25 year period of hardships in order to have his federal student loans forgiven. Since the 1970s, Congress decided to federally guaranteed student loans nondischargeable in bankruptcy and has since expanded that standard to private loans and even throughout the entire loan period. Although Rosenburg was eligible to file for bankruptcy years before, his student loans would have remained until he was met with harsh and unpredictable financial circumstances of being able to survive. Another example of both the extent of time and hardship that is taken into consideration before one can be forgiven of student-loan debt in bankruptcy is Janet Roth, a 68-year-old woman who suffered chronic health problems and was barely able to live on social security benefits. As these cases and standards link together into full-frame, it’s facile to identify unfair and rather harsh acts such as the Senate Bill S. 114, or“Fairness for Struggling Students Act”. The bill reasons that the case for congress setting nondischargeable provisions was obvious and that “…education debt is no different than other consumer debt; it involves profit and deserves no privileged treatment”.

It has been proven through the hundreds of cases filed annually, that student-loans is an increasing national public crisis during bankruptcy. The regulations that have been established since the ’70s has set the peak of Social Darwinism and shown that under the circumstances for a chance of discharge is only survival for the fittest. It is unjust that citizens, who desire to attain a credible education, be fated to either dedicate a portion of their lives to repay knowledge or to suffer a harsh life in order to show that the payment of debt imposed an undue hardship on themselves in order to be eligible for discharge during bankruptcy. It is concluded that student loan debt should be discharged during bankruptcy in all cases, due to the (1) undeniable financial stress caused by student debt, and (2) unethical and unfair standards set by Congress and the senate.

Check out this insightful gem on the internet for more on debt and beyond: (https://economicsociology.org/2014/12/06/until-debt-tear-us-apart-debt-is-a-product-of-power-relations/ )

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Alia Abbas

Alia Abbas

19 y/o. Reengineering alot with molecular engineering, decentralization, geo/behavioral economics, systemic thinking, & evolutionary synthesis of science.