Family Law Prof Blog

Editor: Margaret Ryznar
Indiana University
Robert H. McKinney School of Law

Sunday, November 20, 2016

Lawyer Fights for American Student Debt Trap Victims


Attorney Joshua Cohen may have one of the best perspectives on the student loan debt crisis in America. A thirty-something attorney, Cohen has been intervening on behalf of young Americans caught in the student loan debt crisis for almost five years, and is one of the few lawyers in the US with the knowledge and ability to get people back on track.

Cohen’s website alone gets at least 200 contacts a month from young Americans caught in what promises to be a lifelong debt trap. Without expert legal advice, many would be doomed to a life of payments they cannot afford, harassing phone calls from debt collectors and no hope of ever repaying the money.

The Institute for College Access and Success estimates that two-thirds of university and college graduates leave school with an average student loan debt of approximately $26,000. About one percent have debts in the six-figure range.

All combined, the student loan debt in the US tops out at over $1 trillion. Although it is difficult to determine, the effect of millions of young Americans making bank loan payments rather than spending on consumer goods and services is believed to have a considerable drag on the economy, and will continue to for many years to come.

Most of the loans were made to students through the federal or the state governments. The rest of the loans were made to students through private lending institutions. Understanding the key differences between these two types of loans is one of Cohen’s strongest points and is critical to finding ways to solve a student debt problem.

“The private side is the scariest,” says Cohen. “The banks have lent huge amounts of money to people. If these loans were for any other purchase, for a house, or car, or any other tangible good, the bank would never, ever lend that amount of money to these people.

“I have a 23-year-old who graduated with a hundred thousand in private student loans and no co-signer. He will never ever pay that loan. His degree is in physical fitness. He is personal trainer at a gym and he makes 30K a year. He won’t even touch the principle on that loan. That’s what I call DOA. So now he is sitting on a default and his credit is garbage,” says Cohen.

“This is very similar to the sub-prime mortgage lending crisis where the banks were giving loans to people that couldn’t actually afford them,” says Cohen. “Fortunately, those people could file for bankruptcy, surrender their house and walk away. But people with private student loan debt are not allowed to do that. Congress needs to change the bankruptcy law so that these are dischargeable.”

Read more here.

| Permalink


Post a comment