Magazine article Developments in Mental Health Law

Mental Illness Can Serve as a Basis for Discharging Student Loans

Magazine article Developments in Mental Health Law

Mental Illness Can Serve as a Basis for Discharging Student Loans

Article excerpt

Under federal bankruptcy law, an individual can be excused from repaying student loans if the debt "will impose an undue hardship on the debtor." Ordinarily, the focus is on whether repaying the debt will not prevent a minimal standard of living after factoring in the individual's current and future financial resources and expenses. The Eighth Circuit of the U.S. Court of Appeals ruled that the impact of the individual's mental health should also be taken into account when (1) the individual's mental health affects her past, current, and future earnings and (2) when the stress of the debt is likely to affect the individual's mental health adversely, causing an even greater decline in her earnings.

The individual who was the focus of this case had suffered from depressive symptoms as an adolescent. Despite continuing to struggle with depression and panic attacks, she graduated from college. Even though her depression worsened, she also graduated in the middle of her class from the University of Michigan School of Law. In completing her studies, however, she accumulated more than $142,000 in student loans.

Although she passed her bar examination and was admitted to practice law, she was unable to find work as an attorney and for the next five years worked as a secretary or administrative assistant, earning roughly $30,000 a year. During this time she saw a number of mental health professionals and took a number of medications that reduced her symptoms, but the medications tended to wane in their effectiveness the longer she took them. …

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