Former students of Corinthian Colleges are calling for help after the for-profit university system declared bankruptcy. Many of these students (both current and former) allege that Corinthian misrepresented job placement stats and other information necessary to evaluate the worth of their degree. Lawmakers across the country are investigating whether Corinthian specifically targeted a specific type of student to take out loans to attend its colleges. Unfortunately for these students, there is little a bankruptcy lawyer can do for them, unless they meet very specific standards.
The bankruptcy code regarding student loans was changed in 1998 in order to make it extremely difficult for borrowers to discharge student loan debt. The idea behind this was to make student loans more accessible to low-income borrowers by making the risk for lenders virtually zero. The goal was to make these loans as affordable as possible while allowing all students the opportunity to attend college.
The reality, unfortunately, has been that student loan interest rates have risen substantially (from 2.1% in 2001 to around 7% today) as has college tuition, leaving students trapped in debt with almost nowhere to turn. This is especially true of for-profit universities who often targeted low-income borrowers with aggressive sales tactics. These colleges are extremely expensive when compared to community colleges and offer dubious career prospects, at best.
Borrowers, unfortunately, may not have been aware of this when they enrolled in these universities. They also may not have been aware that student loans are almost impossible to discharge in bankruptcy. For many attendees of for-profit universities, they were much worse off after attending college than they were before.
While not all for-profit colleges are scams, the reality is that many students there would be better off going to a community college then to a state university. The cost of attending these schools is a fraction of the cost of a for-profit school and generally offers much better placement as far as jobs are concerned. This makes it more likely that a borrower will be able to pay these loans back instead of needing a bankruptcy attorney to help with their debt.
In order to discharge student loan debt in bankruptcy, a borrower will need to prove three things:
- They made a good faith effort to repay their debt
- They are unable to maintain a minimal standard of living
- Their situation will not improve with time
It is this last point that makes filing bankruptcy so difficult for student loan borrowers – since a person with a degree is likely to earn more money over their lifetime, it is extremely difficult to argue that their situation will not improve with time.
While it is difficult to file bankruptcy for student loans, it is not impossible. At Westbrook Law Group, we can examine your situation to determine if you meet these strict standards. If so, we will do everything possible to help you get a fresh start free from onerous debt payments. For a free consultation to discuss your debt problems in St. Louis, St. Charles, or anywhere in Missouri, contact Westbrook Law Group today.