A Minor Win for the Law School Debt Forgiveness Crowd

I have spent a lot of time discussing student loan debt on this page, including everything from economic analysis to moral/philosophical debates. Most of this has centered on questions of the role of the legislature in bailing students out en masse, mostly because it is so hard for individuals to make the case for forgiveness in the courts. Nonetheless, it does happen on occasion, once some fairly high hurdles are met. Joe Palazzolo at Law Blog published a brief post about such an instance last week:

"Michael Hedlund graduated from Willamette Law School and took the Oregon bar exam in 1997. He failed. He tried again the next year and failed again. He lost his job at the district attorney’s office as a result.

 

He got a job as a juvenile counselor in Klamath Falls, Ore., and prepared to take the test a third time. Mr. Hedlund locked his keys in his car while stopping to get coffee on the way to the exam and missed it. His goal of becoming a lawyer seemed to vanish. His loans did not.

 

After more than a decade of litigation, a federal appeals court ruled Wednesday that Mr. Hedlund could escape about $53,000 of the $85,000 he owed the Pennsylvania Higher Education Assistance Agency.

 

Student debt is hard to shake. The debtor must show in court that he can’t maintain a minimal standard of living if required to repay the loans; that his state of affairs is likely to persist for a significant portion of the repayment period; and that he made a good faith effort to repay the loans.

In the case of Mr. Hedlund, who sought bankruptcy protection in 2003, only the third prong of the test was in dispute. The bankruptcy court found that his failure to pass the bar was beyond his control, and that, anyway, there was no evidence showing that he would make better wages as a licensed attorney. The court also found that he and his wife and child lived frugally."

 

The internet was predictably alight upon the news of the victory. Those who support forgiveness seemed to be generally supportive of the result. Those who are against forgiveness (as well as some who might advocate for it in some cases, just not here) pointed out that Hedlund failed or missed the bar three times, had a wife who didn't work, only got married and had children after he knew about his debt burden, and frankly, seemed to bring a lot of his problems upon himself.

 

I cannot say for sure whether the above signals a shift in the judiciary's views on student debt, though I would guess that this was more or less a particular case with particular facts decided a particular way. Nonetheless, and while Hedlund may not be a particularly sympathetic individual to many, it is a reminder of the precarious position many grads with high debt find themselves. It is also a reminder that this problem is not going away, and, without some solution (whether addressing the core problem of high costs/easy admission policies/easy debt or addressing the resulting mass of unemployed graduates with high debt burdens) many more systemic problems are certain to arise.