The financial advice gets repeated as a mantra: Student loans are the
one form of debt that can't be forgiven, even in bankruptcy. But a
Klamath Falls man has proven that's not always true.
Mike Hedlund waged a 10-year legal battle to force his lender to
discharge most of the $85,000 in federal student loans he built up while
earning his 1997 law degree from Willamette University
in Salem. He argued that, even when working full-time and living
frugally, he could not repay that much money and also maintain a minimal
standard of living for himself and his family.
Last week, in a decision that could affect debtors in eight states, a
panel of the Ninth Circuit Court of Appeals in Pasadena, Calif., ruled in Hedlund's favor.
It upheld a bankruptcy judge's ruling that Hedlund proved all three
factors necessary to have $53,000 of his debt forgiven: He made a good
faith effort to repay the money; he can't earn enough to both repay the
money and maintain a basic standard of living; and his inability to earn
substantially more is likely to persist.
One twist to the case: Hedlund was unable to make much use of his expensive law degree. He failed the Oregon bar exam
twice in his first year out of law school, then locked his keys inside
his car on the way to his third scheduled test, and so missed it
entirely. He did not try again.
Instead, Hedlund got a $40,000-a-year job as a Klamath County juvenile probation officer, a job he still holds.
"I had planned on making $200 an hour instead of $20 when I agreed" to take out loans totaling about $100,000, Hedlund said.
But testimony from an employment expert convinced judges that Hedlund
holds a good-paying job for Klamath Falls and wouldn't likely earn a
whole lot more as a starting lawyer there, particularly if he worked in
the public sector.
Hedland expressed happiness and relief to have won, lowering his debt to $32,000 plus interest.
"I owe a car instead of a house now," he said. "It's huge for me.
What I've wanted all along is something I can afford," not having the
slate wiped clean, he said.
He and his wife have three daughters, and his wife works one day a
week. He coaches soccer on the side to supplement his income and
continues to live frugally, he said. "We don't go on many vacations,
other than day trips. My newest car is six or seven years old and our
other one is a '96 Explorer."
"I am happy that maybe this will help someone else in their dealings with the student loan people," he added.
When Hedlund graduated from Willamette, he owed two student loan
companies. He struggled to pay either of them, but reached a deal with
the smaller lender to repay $18,000 at $50 a month.
He tried to negotiate a repayment plan with the firm he owed $85,000, called Pennsylvania Higher Education Assistance Agency, but that lender would not agree to a plan Hedlund felt he could remotely afford.
That lender exists to make money to help Pennsylvania students afford
college, and it currently holds $39 billion worth of student loan debt.
A previous director stepped down in 2007 after a state audit revealed he'd issued millions in lucrative, undisclosed bonuses to managers and executives.
In 2003, Hedlund filed in federal bankruptcy court to have most of
his remaining loan discharged. His parents footed his legal bill.
When a judge agreed that all but $30,000 should be wiped clean, the
Pennsylvania agency appealed, setting off a 10-year legal odyssey that
twice reached the Ninth Circuit. Hedlund filed to represent himself before that high court, but Ninth Circuit judges awarded him pro bono representation by an experienced San Francisco firm.
The Portland-based lawyer who represented the lender said Friday he would ask an official with the agency to comment on the decision. None did.
Natalie Scott, a Eugene lawyer who represented Hedlund,
said lawyers for the loan agency suggested that forgiving most of
Hedlund's loans would "open the flood gates" to healthy college
graduates claiming they couldn't earn enough and demanding their loans
be forgiven.
Scott said thinks a smaller set of borrowers will be affected,
because Hedlund's actions and circumstances were particularly
compelling. He tried repeatedly to work out a payment plan that he could
deliver on; he made some payments; he worked full-time at a good-paying
job and applied for jobs paying more; and he put up with having $280 a
month garnished from his wages for 16 months without objecting.
Only when the second lender garnished $1,000 in one sweep, leaving
him without money to support his wife and baby, did he file to erase
most of his loan, she said.
"He had to make his showing, all this evidence, to get part of his
loan discharged," Scott said. "This wasn't a case of, 'Oh, I went to
school and I didn't get this dream job I thought I was going to get, so
now I'm not going to pay what I owe.' He had made his best effort to
pay."
--Betsy Hammond
I think my daughter's eyes are blue. They might be green. She hasn't been around long enough to tell just yet, but they are certainly something. She recognized me for the first time just a few days ago, and smiled up at me in a simple, sweet way that obliterated my heart. She cannot focus on anything more than a few feet from her face, but that, like everything else about her, will change in time. Someday soon, she will be able to see everything, and tragically, this will be the world within her view.(Image: Protected businessman via Shutterstock)Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.
- Frederick Douglass
A report released early this year by the organization Oxfam International revealed that the combined income of the richest 100 people in the world is enough to end global poverty four times over, and that the gap between rich and poor has exploded by some 60% in the last 20 years. Rather than hinder this division, the recent global economic crisis has exacerbated it. Money does not disappear, you see, but tends to be translated up the income ladder in times of financial distress.
According to UNICEF, nearly half the world's population lives on less than $2.50 a day. One billion children live in poverty, and 22,000 of them die each day because of it. More than one billion people lack access to adequate drinking water, and 400 million of those are children. Almost a billion people go hungry every day.
The incomes of 100 people out of the seven billion on the planet could fix that, and then fix it again, and then fix it again, and then fix it again. The exact total of the wealth of these individuals is actually something of a mystery, thanks to the tax havens they use to hide their fortunes. There are trillions of dollars squirrelled away in those havens - no one knows quite how much - and the subtraction of that money from the global economy has a direct and debilitating effect on the people not fortunate enough to be part of that elite 100.
In America alone, some $150 billion in tax revenue is lost each year because of these havens, money that could be used for education, food assistance programs, infrastructure repair and health care. Instead, Americans are told the country is going broke, and are force-fed austerity measures by the same politicians who passed the laws allowing the wealthy and corporations to wallow in treasure like Tolkien's dwarves hiding under their mountain.
The recession being endured by the American people is becoming more a thing of fiction every day. The so-called "job creators" are doing just fine, thank you very much, but they don't seem very interested in using the money they've hoarded to expand the job market. According to an analysis of some 2,300 companies by Bloomberg news, hiring by those companies has risen the least amount since 2010. At the same time, however, those companies are sitting on a cash stockpile of $1.73 trillion.
That's "trillion," with a "T." They can afford to hire people. Lots and lots and lots of people. They just aren't, because they make more money that way...and there's always offshore labor available if they need warm bodies to work on the extra-cheap. More than a thousand of those people died in a garment building collapse Bangladesh last month, and the engine of industry barely burped.
Is there any sign that such glaring and damaging inequalities will inspire a legislative response by America's leaders? Don't hold your breath:
A bill called the Swaps Regulatory Improvement Act recently sailed through the House Financial Services Committee. But when The New York Times went through emails from a lobbyist to the congressmen who wrote it, the paper discovered an unofficial co-author: Citigroup. It turns out that recommendations from Citigroup made up 70 of the bill's 85 lines, with two important paragraphs copied almost verbatim - save for two words that were changed to make them plural, according to the Times.Oh, P.S., the notorious war profiteer Kellog Brown & Root primly announced earlier this month that it will take thirteen years and half a billion dollars for them to wind down their operations in Iraq. They consider this money to be part of the $38 billion deal they made with the US Army back in 2001. How much of that money - your tax dollars - do you figure they have hidden in some offshore tax haven?
The bill takes aim at the 2010 Dodd-Frank Act, the financial regulatory reform bill that was meant to prevent a repetition of the 2008 financial crisis. The specific provision in question forbids banks from trading certain derivatives that critics say were instrumental in causing the crisis. Under Dodd-Frank, those derivatives would have to be moved to affiliates that weren't FDIC-insured, lessening the chance they would be the recipients of government bailouts.
Erika Eichelberger at Mother Jones also compared the Citigroup draft of the bill with the final House version and found them "practically identical." She noted that Citigroup has long played a role in relaxing financial regulations, including the 1999 repeal of the Glass-Steagall Act, which once prevented commercial banks from engaging in the same activities as investment brokerages.
The majority of congressmen who supported the legislation were Republicans, but it was co-sponsored by Rep. Sean Patrick Maloney (D-N.Y.), who, the Times reported, recently held a fundraiser in Washington, D.C., in which corporate executives and lobbyists paid up to $2,500 to have dinner with him. While there has been a notable lack of bipartisanship in Congress in recent years, it appears that both Democrats and Republicans are more than open to Wall Street's money. As Sen. Dick Durbin (D-Ill.) once said of Congress, banks "frankly own the place."
Not so very long ago, the Occupy Movement sought to draw a bright public circle around the terrible influence enjoyed by the few over the many. Mainstream opinion will say the movement collapsed due to its own inadequacies, but recent revelations have shown how the movement was attacked and undermined by law enforcement, elements of "homeland security" ostensibly meant to be part of the federal government's anti-terrorism programs, and by private security firms hired by corporations and wealthy individuals to keep "undesirables" out of sight and out of mind.
Occupy was only the beginning, but may very well have been the last manifestation of peaceful resistance against the ever-widening chasm of inequality and desolation. The noose is tightening around the necks of average people, and more become radicalized with each passing day. The wealthy would do well to take note of this, and voluntarily move to square the savage imbalance that drives billions around the world into furious despair. It does not have to be this way, and if it continues in this way, eventually the dam is going to break. When that happens, woe be unto those who believe their wealth keeps them safe and cozy. On that day, the rock will not hide them, and the dead tree will give no shelter.
If it does not happen in my lifetime, it will happen in my daughter's. I shudder to think what she will see.
