Student Loan Problems

A loan offered to assist with paying education-related costs is referred to as a student loan. The costs a student loan is intended for usually include room and board, tuition, and textbooks. There are federal student loans and private student loans.

With a federal student loan, individuals do not begin paying their student loans back until they have graduated, are no longer attending college or have changed their enrollment status to less than half-time. Many private student loans require individuals to begin making payments while they are still attending college, no matter what their enrollment status is. Interest rates on a federal student loan are fixed; whereas, private loans frequently have variable interest rates.

If you want to learn more about student loans and student loan debt, you can find all of our blog posts related to student loans on this page.


That old adage that “things are never as they seem” aptly describes the current situation with student loan servicers. As reported by the New York Post, servicers like Navient—the largest student-loan servicer in the U.S.— are only making the student debt crises even worse. Here’s how the process goes for many borrowers: Get an undergraduate and/or professional degree with the aid of student loans; Get a job (but fail to make the salary you had hoped); Realize that repaying those loans may prove difficult; and Apply for a repayment program that lessens your monthly obligation. The problem? Your student-loan servicer…Read   More

Last year, economists at the New York Federal Reserve released an analysis showing that older Americans were significantly more in debt than in previous years.  While this might not be that surprising given the aging population in the United States, a source of the debt might be less obvious: student loan debt. The analysis compares average debt per U.S. resident by age in 2003 and in 2015.  From 2003 to 2015, debt borrowers between the ages of 50 and 80 increased their debt balance by roughly 60 percent. In this time, the average student loan balance per borrower more than…Read   More

I previously wrote a series of blogs addressing issues with student loan debt.  As previously mentioned, student loan debt has now surpassed a trillion dollars in this country.  Now the Consumer Financial Protection Bureau has filed a lawsuit against one of the nation’s largest student loan servicers, Navient.  In the suit CFPB has alleged that Navient mishandled student loan payments, hid information critical to a successful repayment of student loan debts and complicated the procedure for releasing co-signers from the debts.  The New York Times opined that the lawsuit alleges abuses by Navient eerily similar abuses in the mortgage lending…Read   More

I previously blogged about the issues that led ITT Technical Institute to close its doors and file for bankruptcy.  Now, five former ITT students have filed a class action complaint against ITT in its bankruptcy proceeding.  The class action is filed on behalf ITT students who were harmed by ITT’s conduct.  Lawyers from the Project on Predatory Student Lending at Harvard Law School filed the adversary proceeding in the bankruptcy case, which is being overseen by Judge James Carr in the Southern District of Indiana. In addition to alleging violations of consumer protection statutes and breach of contract, the former…Read   More

According to “Student Debt and the Class of 2015’” the latest report from the Project on Student Debt, about seven in 10 (68%) college seniors who graduated from public and private nonprofit colleges in 2015 had student loan debt.  The average graduate owed $30,100, which is up 4% from the 2014 report.  Almost one-fifth of the Class of 2015’s student debt was from private non-federal loans, which provide fewer consumer protections and repayment options and typically less favorable terms for the borrower than federal loans. For-profit colleges were not included in the report because so few of those schools report…Read   More

A recent survey conducted by Student Loan Hero, as reported by CNBC, has found that many college students are using some of the student loan money to pay for expenses other than tuition and books.  The survey conducted in September 2016 of over 1000 students,  reports that 2 in 5 students who receive student loan funds use those funds to pay for things other than their education. Jeffrey Trull, Student Loan Hero’s content director, noted that “it’s pretty easy to use your excess funds this way,” Once a student receives their funds from the lender and the tuition is paid,…Read   More

  Many folks who come into our office are carrying mountains of long term student loan debt. The good news is a lot of people are in the new income based repayment plans that are being offered. I previously wrote about some of these plan here. There are also some circumstances where student loans can be discharged in bankruptcy, although the requirements to prove hardship are very stringent and, therefore, it is very difficult to attain a hardship discharge of Student loan debt, whether public or private. Robert Reese recently wrote about some hardship options. The current precedent that sets the…Read   More

On August 22, the Consumer Financial Protection Bureau (CFPB) took action against Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. The Bureau identified breakdowns throughout Wells Fargo’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. The CFPB’s order requires Wells Fargo to improve its consumer billing and student loan payment processing practices. The company must also provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty to the CFPB. A…Read   More

The discharge of student loan debt is possible in bankruptcy if the borrower can prove an extreme hardship. What does discharge mean? Simply that you are no longer legally liable to repay the debt. How do you prove an extreme hardship? The answer to that question is a much more difficult one to answer. I recently read about a gentlemen over the age of 60 who was able to discharge more than $200,000 in student loan debt. He took out several parent PLUS loans to pay for college for his 3 children. When he and his wife filed for bankruptcy,…Read   More

As we have noted on the blog before, student loan debt is a huge problem among consumers.  Most of the time, student loan debts cannot be discharged in bankruptcy.  However, if you can prove an undue hardship, the student loan debt can be discharged.  Note that it is rare for a court to find that a debtor meets this burden. Undue Hardship The section of the Bankruptcy Code that deals with student loans and the discharge is 11 U.S.C. § 523(a)(8).  Congress enacted this section of the Bankruptcy Code to prevent students from abusing the fresh start principle of bankruptcy…Read   More