Student Borrowers Tap a New Path to Loan Forgiveness: Bankruptcy

The number seeking relief in court increased in the past year after a policy change, but remains extremely low for now

By Gabriel T. Rubin of The WSJ. Excerpts:

"More Americans are filing for bankruptcy to get rid of their student debt.The increase came after the Biden administration made it easier for student borrowers to apply for bankruptcy by overhauling its guidelines last November. The government now supports borrowers’ use of bankruptcy to eliminate student debt when they meet certain economic hardship conditions"

"The application numbers remain extremely small, with just 632 borrowers using the new process from last November through September"

"The average annual rate of borrowers using bankruptcy to eliminate student loans was around 480 before the pandemic pause on federal student loan payments. The growth is notable because Americans weren’t required to make student-loan payments until last month."

"More than three million borrowers have had $127 billion of their federal student loans flagged for cancellation"

"Debt forgiveness is a win for many borrowers, but comes at a cost to taxpayers."

"When a borrower files for bankruptcy, the government calculates whether expenses equal or exceed the person’s income. If so, the Justice Department declares that the borrower cannot reasonably pay the debt, and that the debt should be discharged."

"In nearly all cases where that has happened in the past year, judges have accepted the government’s argument and agreed to a full or partial discharge."

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See also from Feb. 2020 this article 33 of the Highest-Paying Majors You Can Choose in College.

Here is the salary data from that article

The 15 Highest-Paying Majors Overall

1. Petroleum engineering Median salary: $135,754 

2. Pharmacy, pharmaceutical sciences, and pharmaceutical administration Median salary: $112,519 

3. Metallurgical engineering Median salary: $97,743 

4. Mining and mineral engineering Median salary: $97,372 

5. Chemical engineering Median salary: $96,156 

6. Electrical engineering Median salary: $93,215 

7. Aerospace engineering Median salary: $90,141 

8. Mechanical engineering Median salary: $86,883 

9. Computer engineering Median salary: $86,553 

10. Geological and geophysical engineering Median salary: $86,553 

11. Computer science Median salary: $82,858 

12. Civil engineering Median salary: $82,858 

13. Applied mathematics Median salary: $82,858 

14. Industrial and manufacturing engineering Median salary: $81,452 

15. Physics Median salary: $81,143

 

The Best College Majors Outside of Technology and Engineering

 

1. Economics Median salary: $76,000 

2. Finance Median salary: $73,000

3. Accounting Median salary: $69,000 

4. Oceanography Median salary: $69,000 

5. Geology and earth science Median salary: $69,000 

6. Food science Median salary: $67,000 

7. Agricultural economics Median salary: $67,000 

8. Nursing Median salary: $66,000 

9. Industrial and organizational psychology Median salary: $66,000 

10. Meteorology Median salary: $66,000 

11. Public policy Median salary: $65,000 

12. Chemistry Median salary: $64,000 

13. Political science Median salary: $64,000 

14. Marketing Median salary: $63,000 

15. Forestry Median salary: $62,000 

16. Business management and business administration Median salary: $62,000 

17. International relations Median salary: $62,000 

18. Microbiology Median salary: $62,000