Remember when Joe Biden ran on a pledge to do something about the astronomical level of student debt artificially damping economic activity by locking a whole generation out of big-ticket purchasing? Yeah, he doesn’t either.
While many pushed for a robust federal debt relief program so 30-somethings with high-five figure incomes could finally move out of their parents’ basement, Biden refused to commit to anything grandiose. Since taking office, he’s mostly backtracked on his own modest proposals, disappointing Democrats enough that Chuck Schumer’s publicly attacking the White House on the issue.
But it’s one thing to refuse to take action on student debt and it’s another to use the massive resources of federal government to make student debt even more onerous. And yet, here’s the Biden administration filing an appeal to keep people crushed by student debt in an inescapable hellscape forever.
Ryan Wolfson sat on nearly $100K in student debt at the age of 35. After college, Wolfson’s epilepsy made it exceedingly difficult to find work that could cover his living expenses and ballooning student debt bill. After suffering a seizure as an Uber driver and totaling his car, Wolfson filed for bankruptcy.
Last month, a federal bankruptcy judge allowed Wolfson to discharge his student debt in bankruptcy.
The evidence shows that, despite considerable effort, Wolfson has been chronically un- or underemployed since graduating from college; that his sporadic full-time employment has consisted of low-paying gig work or jobs with little prospect of advancement; and that he has avoided living in abject poverty only through significant financial support from his father. The record further shows that Wolfson’s career prospects are unlikely to materially improve over time, and thus, his inability to pay his student loan debt will persist.
Judge Laurie Selber Silverstein determined that Wolfson met the original confines of the “undue burden” rule, despite the fact that since its articulation in 1987, courts have largely acceded to government and private lender pressure to expand the scope of the standard to keep student debt safe from bankruptcy discharge.
That’s where this appeal fits in. Rather than take the “L,” the government appealed Judge Silverstein’s opinion hoping to squelch a precedent that might suggest student debt can ever receive the same treatment we afford other kinds of debt.
It is, after all, a slippery slope. If the courts recognize that someone with a serious neurological disorder is never going to make back his student debt, what’s next? Will it start protecting widows and orphans? The horror!
Bankruptcy exists to assist folks who find themselves in this situation and, ultimately, to help people get back to contributing to the economy. But courts routinely carve out student loans as an albatross that must remain around the neck of financially stressed people. And guess why we have that rule!
Per the Daily Poster, who is all over this story:
That higher standard is in part thanks to Biden himself, who as a senator spearheaded a law in 2005 that made it more difficult for student debtors to claim bankruptcy for private loans. About half of Wolfson’s debt was held by a private loan provider, and half by the federal government.
All of those videos of a pre-senatorial Elizabeth Warren dunking all over Joe Biden in hearing testimony? That was all about this law, which the formerly Republican Warren warned would become an even more destructive horror for poor people.
There’s no real reason why student debt should be treated differently than any other debt and if we’re not going to approve a stimulus package to let folks with student debt get back to square one, then the very least we can do is allow anyone willing to avail themselves of the bankruptcy process, with all the strictures that places on people, the opportunity to restructure all their debts.
The administration is presently committed to blocking both options.
Biden Moves To Block Student Debt Victory [Daily Poster]
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
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