The United States Supreme Court recently denied hearing an appeal of a Wisconsin man who was trying to eliminate more than $260,000.00 in student loans in a Chapter 7 bankruptcy proceeding. With student loan debt at an all-time high, and defaults on paying those student loans at an all-time high, the issue of eliminating student loans in bankruptcy is ripe for a Supreme Court decision. Especially because the standard being used by most courts to determine whether a student loan can be discharged is decades old and is extremely stringent.
So, why did the Supreme Court deny hearing this appeal? It most likely will never be totally clear. However, this may not be the case that individuals with student loan debt would have wanted in front of the Supreme Court.
As stated above, it is extremely difficult to eliminate student loans in a bankruptcy based on the current standard used by most courts in the country. Any relaxation of this standard would be welcome by many of the student loan borrowers who can’t make their payments despite their best effort. However, the individual who brought the appeal in this instance claimed that “his alcoholism, depression and criminal record have prevented him from finding a job and repaying his debt “. He also reportedly failed the bar exam twice after attending law school.
Is this the case that borrowers would like for the Supreme Court to decide and set a new standard with? In my opinion, it is not. As unfortunate as it is that this individual apparently had alcohol problems and some run-ins with the law leading to a criminal record, what the Supreme Court really needs to decide on appeal is a case in which a good faith effort was made to repay the debt by someone without these issues. In other words, an individual who couldn’t use such extreme extenuating factors as a reason for not being able to pay the loans. Only then would there most likely be any real change in the standard to eliminate student loan debt for those in need.
To be clear, the time seems to be right for the standard for getting relief from student loans in a bankruptcy to be modified and made less stringent. However, given the circumstances, this case didn’t seem to be the right set of circumstances for the Court to set a new standard. Here’s hoping that a case with the right circumstances comes along soon.