"An equally insidious danger for every [person] is to lose all sense of myth and mistake disenchantment for wisdom."
The follow is a paraphrasing of the story of Lisa told in Josh Mitchell's book The Debt Trap. Please go read that book. I demand you to read it.
In 2018 Lisa, a 54-year-old single mother of two just filed for bankruptcy. She had breast cancer and $96,820 of student debt remaining after paying $135,603.34 over her lifetime. A 20-year-old Lisa had a dream of being a psychologist. Before Lisa, no one in her family went to College. One day she decided to give college a try she enrolled in her local University - Farleigh Dickinson University, a private university close to where she lived. Like most people, Lisa thought that college was the hallmark of a great life, it was a requirement to move up the social ladder, it was the cornerstone of the American Dream. Lisa took out various student loans to attend Farleigh Dickinson University and after completing her undergraduate studies she soon realised that New York law requires one to have a PhD in order to practice in her field. Upon this realisation a committed Lisa decided to continue her studies, by the time she got her PhD in 2001 her debt balance had reached $119,000. More than a fifth of that was interest built up during her time studying, owning double the average salary of college graduates at the time.
Lisa was part of a trend. A trend that saw the number of borrowers with balances exceeding $50,000 rise from 2% of all borrowers in 1990 to 17% in 2014 which was 5 million people in 2014. Seeing that she couldn't keep up with her payments she decided to refinance into a 30-year-term "consolidation loan" with an interest of 6.4%. Naturally, once you refinance into a longer term loan you're monthly payments reduce but in the long run it was far more costly. After refinancing, in total, she'd have to pay $150,000 interest but in total the cost would be $270,314.88... for her education. To make matters worse she took on a 239,000 mortgage that her ex-husband used to finance property later that year she was also diagnosed with breast cancer.
On February 2016, she decided to file for bankruptcy because there was no way she could pay off her debts with her $70,000 dollar salary. Her lawyer, Bob Lohr, explained to her that unlike other forms of debt such as mortgages — which can be relieved through foreclosures — student debt was almost impossible to discharge in bankruptcy; Congress in 1976 decided that student loans could only be relieved if the borrower was experiencing "undue hardship" what defines as undue hardship was left for the judges to decide. Lisa thought that perhaps her cancer diagnosis would make her qualify for "undue hardship" whatever that meant. It wasn't. After 10 months of discovery the lawyer hired by the government decided that she did not meet the threshold for undue hardship. When Lisa declared bankruptcy she joined the 8 million American students that defaulted on federal student loans. Since 2007, student debt tripled to to $1.4 trillion. There were nearly as many students who defaulted as there were homeowners who lost their homes in 2008.
Once the tables started to turn on some college chains such as ITT and Corinthian Colleges, they had to declare bankruptcy amidst lawsuits for deceptive advertising. These big companies could escape their responsibilities through bankruptcy. The world has played a cruel trick. The very people defrauded students and preyed on their beliefs in the American Dream got away unscathed, while people like Lisa where drowning in insurmountable debt that could never be relieved.
In 2018, when Lisa was about to give up her legal bankruptcy fight. She got a call from her lawyer, who told her that the opposition lawyer decided to not contest the case any longer. Without contest Lisa wins by default and her student loans would be relieved. A monumental moment in her life a huge sigh of relief. When Lisa and her lawyer tried to find out what caused the sudden withdrawal, they found out that opposition lawyer dropped the case out of sympathy. The law has no sympathy. But a stranger — hired by the government to go after her — did. She got her life not because of any sort of reform or societal change. She got her life back because some stranger who could've ended Lisa's life decided to show mercy instead. How many of those 8 million would've received that same sort of clemency.
