What Can I Do About My Student Loan Debt?

Student loan debt has been dischargeable in bankruptcy court since the 1980’s. It isn’t an easy decision to file for bankruptcy. Bankruptcy is not, and should not, be the entire safety net for those in financial crisis. However, it is the most organized, recognized, and effective system available that offers relief to those who need it the most. 

Student-loan-debt-wall-Michelle-Labayen-is-a-Miami-FL-student-debt-attorneyThe Law Offices of Michelle Labayen, LLC has successfully won cases against public and private lenders. Michelle has helped her clients to get into a more suitable repayment plan by changing the interest rate, changing the plan, receiving a partial discharge, and, in some cases, a full discharge of student loan debt.

Most lawsuits, if they reach a settlement, are protected by a non-disclosure agreement (NDA). As a result, they can’t become public knowledge. Ultimately, there could be countless other lawsuits including any of these predatory lending agencies.

Moreover, there’s no good reason to allow private student loans to be treated differently than other types of unsecured credit. In fact, exempting these loans from discharge is likely to cause even more harm for borrowers. This is because there are no meaningful borrowing limits, or caps on interest rates and fees charged for private student loans.

Some of the lenders that are facing, or have faced, lawsuits for predatory practices include:

  • Navient
  • Sallie Mae
  • Department of Education
  • Great Lake Servicing
  • AHES
  • Jefferson Capital
  • ECMC
  • Nelnet

The Department of Education has been accused of misleading borrowers regarding the repayment option known as the Public Service Loan Forgiveness Program by four Democratic Senators, pictured below: Tim Kaine (D-VA), Sheldon Whitehouse (D-RI), Tammy Duckworth (D-IL), and Maggie Hassan (D-NH). The DOE allegedly turned away borrowers who qualified for the program, so they were unable to have their loans forgiven.

How Serious is the Student Loan Debt Issue?

Student loan debt has become the second largest debt in America, passing $1.5 trillion in 2018. By 2023, 40% of borrowers are expected to default on their loans.


Student loan debt is both an unavoidable aspect of higher education and an unmanageable burden to bear. The Bankruptcy Code US Section 523(a)(8), allows for an opportunity for students to seek a partial to full discharge of their debt through bankruptcy court.

However, due to the slim allowance for this rule and the unaffordable lawyer fees, students have almost no pathway to relief. Missing just one student loan payment puts a borrower in delinquent status. After nine months of delinquency a borrower is in default.

As of July 1, 2019, the DOE planned to enact a new rule that replaces the Borrower Defense to Repayment rule created by the Obama Administration. This means that students who were misled about the quality or cost of their education won’t be able to get a full discharge of their student loan debt. Courts are already dismissing cases by students suing Corinthian College, Inc. for misleading practices, or for not allowing full discharge of the debts.

This new rule has been postponed by a Magistrate Judge Sallie Kim of the U.S. District Court in San Francisco who ruled that “the Trump administration violated privacy laws by using Social Security Administration data to calculate loan forgiveness.”

(“Courts halt DeVos’s partial student debt relief plan”, Washington Post.)

What can You Do?

Outside of paying, forbearing, or consolidating (consolidating make it a “new debt” outside of the 10 year or 20 year track) start with these steps.

  • Get involved, call your Senators, Congress members and Representatives
  • Become versed with legislative action and follow www.govtrack.us/start

Bills to Follow

S. 2235: Student Loan Debt Relief Act of 2019

Sponsored by Elizabeth Warren

A bill to discharge the qualified loan amounts of each individual, and for other purposes.

Click here to follow S. 2235

H.R. 885: Private Student Loan Bankruptcy Fairness Act of 2019

Sponsored by Steve Cohen

To amend title 11 of the United States Code to modify the dischargeability of debts for certain educational payments and loans.

Click here to follow H.R. 885

Contact Michelle, today, and get on the path to financial freedom.

The Law Office of Michelle Labayen, LLC Can Help With The Bankruptcy Process

Anyone can qualify to file for bankruptcy. There isn’t an exact amount of debt or financial difficulty required. You don’t have to show insolvency or meet a certain standard.

You should always speak with a lawyer before beginning the bankruptcy process to ensure it’s the best option for you. Michelle Labayen is a knowledgeable and experienced bankruptcy attorney with offices in New York, NY, and Newark, NJ. Florida licensed attorney Drew Gaddis is counsel and would be representing all clients in Florida.

Miami Bankruptcy Office

100 SE 2nd St Suite 2000 #A
Miami Tower
Miami, FL 33131
Phone: (786) 209-2327