Turner & O’Connell, Attorneys At Law

Serving Pennsylvania since 1984


Our lawyers solve difficult legal problems concerning bankruptcy, divorce, obtaining disability benefits, real estate and estate planning.

Debt without degree – a bitter predicament

| Oct 3, 2017 | Bankruptcy |

People go to college in hopes of bettering themselves economically. But in the system we have today, college loan debt and underemployment can make it impossible to succeed.

The worst is when the debt forces you out of college, and the only jobs you can get don’t pay enough to reduce that debt – which is now useless to you.

A cycle of economic pain

You can’t get a better job because you lack the degree. The low-paying job doesn’t provide enough funds to pay your tuition debt. It is a cycle of pain, with no visible way out.

A recent article in the Atlanta Journal-Constitution underscored the problem many young people face.

How real is the problem? In the state where the article was published, more than 108,000 students dropped out of Georgia colleges and universities between 2013 and 2015. They didn’t get the degree they needed, but they sure had to repay federal student loans.

Young people end up working warehouses or restaurants – because that’s the best they can get without an education. Try paying back thousands of dollars working at these places. And factor in the discouragement of knowing you will never get the education you need.

That’s just the beginning of the problem. You can declare Chapter 7 or Chapter 11 bankruptcy and have many of your debts discharged, wiped away.

But student loans are one of the exceptions to the list of dischargeable debt. Like back child support, bankruptcy cannot wipe these debts away.

Congress could solve this problem

Only an act of Congress can change this exemption. And even though making student loan debt dischargeable would save millions of young people from this painful cycle, and allow them to contribute their true talents to the economy – the current Congress has shown no willingness to make these loans dischargeable.

Our advice to you is to entertain the idea of declaring bankruptcy anyway. It will wipe your credit card and medical debt records clear. Your student loan debt will not go away. But with your credit record cleared of other debts, you will be able to focus on paying back your student loan.

Our hope is that you catch a few breaks and are then able to complete your college or other career dreams.