So, you’ve made it through school and it’s time to find the job of your dreams. The only issue is the job of your dreams doesn’t pay the bills due to all the student loan debt that occurred from school. You’ve done the homework to see if there is an easier way to make payments. Maybe you’ve looked at bankruptcy. You found out that is not an option due to the wording of “undue hardship.” What is “undue hardship?”

That is something that is actually being discussed right now in a court case in Boston. Undue hardship is not defined very clearly. This court case could disclose a definition on what undue hardship actually is. A 65 year old man from Boston has spent the last three years appealing his way to the Boston Federal courts. Now the Boston Federal court is considering his case. If Robert Murphy wins this case and has undue hardship defined it could end up erasing hundreds of thousands of dollars in student debts away.

In the 1970’s congress added rules to the bankruptcy laws that excluded most student debt from relief. For anyone that has tried to declare bankruptcy on their student loans must prove that repaying the debt would cause an undue hardship. Lawmakers in Washington D.C. have never defined an undue hardship.  

How many people are behind on student loans?

Right now in America there are 5.1 million people that are at least three months late on making their student loan payments. 21.5% of people that have a student loan are considered severely delinquent with their student loan repayment. In June of 2014 this number was at 20.4 percent of borrowers or 4.3 million people.

How much of debt due to student loans?

Roughly $1.3 trillion in student loan debt could cause another bubble to burst with the US economy. Student loan debt ranks number two of all debts in America. The top spot belongs to housing debt. Currently, in the United States, we have $11.6 trillion in mortgage debt.

Rising cost of school tuition

Imagine being able to pay from school with the average tuition cost of $1,832 a year. Well, that is what it was in 1971-72 school year. Today that number has went up sharply to $31,231 a school year. As the cost has gone up so has the cost of everything else. Housing is up at schools, text books cost more and transportation has been on the rise as well. All of these combined can spell doom for recent college grads.

What defining undue hardship could mean?

If the courts clearly define what undue hardship is, we could potentially see a pathway for some to be able to have their student loans forgiven. This will be a case that will have a lot of attention on it when the definition is explained. As for now, bankruptcy cannot be declared on student loans.


If you are facing hard financial times due to medical bills, credit cards, payday loans or even other reasons call Castle Law Office at 816-842-6200 or contact us by email to set up a free consultation. 

Jason C. Amerine
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President and Owner, Castle Law Office of Kansas City
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