Is the government finally going to deal with the issue of student loans and bankruptcy?
The Department of Education came out publicly and stated they wish to consider options for students loans and bankruptcy. At issue is determining what does “undue hardship” mean which remains undefined by Congress and left to the courts.
- Student loans are at an all time high of $1.4 trillion.
- Average student loan debt is $34,000.
- 4.6 million borrowers are in default
- A default is more than 270 days late on payments.
Even if bankruptcy is not the solution, my idea involves reducing the principal on student loans via charitable work. For example, since I practice bankruptcy law, why not give me the choice of representing debtors pro bono and receiving what would be my fees as a credit towards my student loans? Lawyers now take on pro bono cases for CLE credit, why not do the same for student loans? Organizations like Legal Aid are overworked, understaffed and underpaid, and this would help fill in the gaps.
Committees or a board can be set up to figure out the standard fee for a case in a particular area and then an agreed upon portion would be used towards the student loan. The debtors will be screened by the committee to confirm they are in actual need of pro bono work.
Each year the amount of money credited will be capped based on the amount owed on the student loan. But, why stop there? What if instead of working pro bono on bankruptcy cases, I’m passionate about the environment or pets? I could also work with other organizations that are previously approved by the government and work for them, too. For example, I can work with an organization that rescues pets and I worked for them “x” amount of hours this month which results in a credit worth “x” amount. And it could be any charitable type work whether feeding the homeless at a shelter or picking up trash on the side of the road. If you are a therapist, mental health and marriage counseling could be offered, etc.
The possibilities are endless and with charities always in need of more help, this would be a win-win for all parties involved, and even better, bankruptcy is avoided. Charities get much needed help, student loan debt gets reduced without the financial struggle, and then there are the intangibles such as giving back to society.
Alexander Hernandez, Esq.
Alexander Hernandez is a bankruptcy attorney practicing in Jacksonville and the surrounding areas and Miami, Florida.