The Cancellation Of Student Loan Debts Issue Or How I Got Religion! Have you???

USC Law School Logo

I follow the ongoing crisis in student loan debts with a great deal of interest. Circumstances compelled a start of second career at the age of 42. When I returned to law school at the University of South Carolina School of Law, I had no clue as to the financial obligations law school compelled in covering its costs. Over the course of the earlier 20 years the rising costs of college tuition, costs, fees and books received scant attention from me. This, despite the hue and cry in the media on these topics. It didn’t affect me and I paid it little attention. I didn’t intentionally ignore the subject. So many other things occurred in my life and left little time for much else. Occupying my life with such blind, willful naiveté has no part in my life any longer.

When completing my application for admission, checking the box requesting financial aid and completing the FAFSA paperwork that came enclosed with the acceptance letter saved my future career. 1L law students, the ignominious appellation labeling us, had no choice in their schedules. Everyone received the same schedule, the differentiated only by section designation. After picking up my class registration schedule, I presented myself at the fee payment window. The kindly woman at on the other side of the window asked if financial aid counseled me on debt repayment. A normal person would go on point at that question. But not your thick-headed scribe. “No,” I happily chirped. Here came the knockout punch with my chin merrily stuck out. “Do you suppose you can pay slightly over eleven thousand Dollars in cash in payment of your tuition and fees?,” she inquired cautiously. She must have seen the blood draining from my face. “Do you need some assistance?,” she asked, a note of concern in her voice. To this day, I’m not sure if the inquiry meant financial or medical. “Uh…um…yeah, um…I…ah…guess…I…ah…do,” I stammered out. “Go take a seat under that sign saying ‘Financial Assistance‘. Someone will help you. Then come back here. I will keep your paperwork and when you get back, we can complete the process,” she said. She sounded very sympathetic and somewhat bemused by this hulking, 42-year-old, incoherent moron standing in front of her. As an aside, I subsequently found out she lived across the street from us and we became fast friends.

The young man with the bored expression who called my name as I sat under the sign, motioned me silently toward a chair in front of him. “Name?” “James N. Hadstate.” “Social Security Number?” I answered after a querulous “What do you need that for?” with his response of “Do you need Financial Assistance?” “Law school?”, he snapped. “Yes,” I mumbled. “Go to that booth, put those headphones on, push the red button and a video will come on explaining your obligations to the Federal Student Loan program. When it finishes, come back here and sign your contract.” The bored sound and expression returned to voice and face. I do not recall a single statement made on that video. I was still too stunned for any real comprehension. I returned where the bored young man awaited me. “You qualified for $30,000.00 for this semester. Return to fee payment and pay your tuition and fees. Sign here, here and here. Also, on this form initial here, here and here and sign here. The balance will be on an account at the law school financial aid office. You may draw it as you need it for books, room and board and supplies. These are your copies.”

It was all so breathtaking and casual. $30,000? My down payment on my last and lost house had been slightly less! One semester? I planned the entire course of study at law school for that amount of money!  I simply couldn’t take it all in. I stumbled into the line of the women with my other paperwork. Thank God the medical school and the law school started a week before the undergraduate and graduate students of the other disciplines. Only 2000 people spread over a 3 day window surely beat 50,000 spread over a 5 day window. When my turn came again before the kindly woman, she said, “Let me print out your receipt and I need your signature acknowledging application of some of your financial aid for your tuition and other fees.” “OK”, I mumbled. While she did this she asked how long since I graduated from college. “Twenty years,” I replied. “Do you have children in college?,” she inquired. “No,” I mumbled. “Oh, that explains it! Yes, I suppose it would entail a great deal of sticker shock after this much time.” she said, “Just wait until you get to the bookstore, Sugah!” The prices didn’t seem like home, but her verbiage reassured me that I was home again, where everyone is “Sugah” or “Sweetheart” or Darlin’ or some other casual term of endearment. The bookstore run ran up a tab of nearly $1500.00. I still needed a new computer with Windows and the student priced Microsoft Office Professional. I decided on one built locally by a provider since I learned the hard way about proprietary hardware. It still ran almost $2000.00, even with the student discount from Microsoft and self-installing most of the software. Another aside, a guy who cut his computer teeth on MS-dos, Windows sent me to heaven. And the RAM I bought far exceeded any I previously used so between the faster processor and the RAM, Christmas came early.

Between my wife’s salary at the University of South Carolina Thomas Cooper Library and the income from my disability insurance policy, we didn’t need any further draws on the financial aid. However, by the time I graduated with my Juris Doctor, my grand total, after only three years of law school, was a staggering $58,000.00. At least that total staggered me! And that after some $15,000.00 in scholarships. All my loans were Perkins loans due to my wife’s relatively low-income with 2 dependents (my son and I)(my disability income didn’t count as “income”). Each semester I qualified for more and more financial aid. And each semester the tuition, fees and books increased and increased. Law school tuition, fees and books exceeded undergraduate costs by roughly the same as the medical school; a factor of some 2.5X. The only good thing about this time period of my life? Besides getting my JD and passing the bar exam, my wife obtained her Masters Degree in Library Science free of charge as an employee of the university. With a portion of my last semester’s financial aid, I paid for 2 courses that saved my neck: “Bridging the Gap” and the bar examination preparation course. The former the South Carolina Supreme Court, the arbiter of South Carolina BarAdmissions; the latter taught mostly by my former professors at the University law school and geared directly towards the South Carolina Bar Examination. Although the South Carolina Supreme Court administers admissions to the Bar and conducts Bar disciplinary proceedings, this does not relieve the expectation of all members of the SC Bar belonging to the South Carolina Bar Association. With the bar exam passed and the swearing-in ceremony by the Chief Justice of the South Carolina Supreme Court Justice Ernest Finney, I prepared for a lucrative career in law with an easy repayment of those student loans. Or so I thought.

Law firms divide themselves into three groups: Plaintiff firms, Defendant firms and Public Service/Poverty Law firms. Logical. Payment of salary methods vary wildly between the three. In plaintiff firms, the payment method involves a small monthly salary and a small percentage of the law firm’s retained fees after winning a case. Over a relatively short period, the small monthly salary disappears, replaced by a much larger percentage of the retained earnings of the fees of the law firm.  The small percentage retained the firm uses for office overhead. The client pays no up-front fees or, at most, very modest anticipated court filing costs. The other attorneys in a Plaintiff’s firm expect everyone maintain a membership in the South Carolina Association for Justice. I knew that I could work for these type firms if financial alternatives precluded my first choice.

The defense type firms pay their new-hire attorneys outrageously large salaries right from the first. For this reason, defense firms usually hire from the top 10% of a graduating class. My class had slightly over 400 graduates. Therefore, one could reasonably anticipate the hiring of 40 or so lawyers by these firms. Although I ranked in the top 10 in my graduating class, I despised the clients usually represented by defense firms, i.e. insurance companies, industrial companies who maim and kill people (employees or the public), industrial polluters, etc. I turned down several handsome offers from several defense firms. I simply could not work for these type firms. Alcoholism/drug dependency held no appeal for me, an all too common occurrence at these type firms.

I did not want additional neurotic disorders. The ones then currently blessing me, I knew, adequately served any wants or needs for the remainder of my life. The partners in a defense firm expect everyone maintain a membership in the South Carolina Defense Trial Lawyers Association. The untested attorneys may or may not have any practical skills in trial preparation or trial presentation, making a huge deficiency with  a hiring method based solely on class ranking. New lawyers are expected to bill between 2100 and 2500 hours each year. The firm doesn’t care how the get it, the must just get it. They have been assigned to 2 or 3 partners in the firm who will bill the time of the associate out as their own at outrageous rates, anywhere from $150.00/hr to $500.00/hr. It is now up to $200.00 to $1000.00/hr. It’s not rocket science why the partners want those billable hours. By the end of the 3rd year of practice, the partners meet and decide who they want to put on “partner” track. Those on partner track are given a mentor, guiding them on the ins and outs of litigation, billing, client relations and so on. The others continue to be paid as long as they produce, but nothing like a partner. They are also encouraged to leave the firm. They usually end up going to Federal Attorney jobs, local prosecutor jobs or other defense firms with a firm understanding about a partner track.

Then there are the public interest/poverty lawyers. Public interest lawyers aren’t necessarily poorly paid, but they are not paid nearly as well as their peers. Poverty lawyers are underpaid and must love their work or they will not make it very long. They are not as underpaid as public defenders, but it is a close. When I got a job immediately after law school with a poverty law firm that covered the entire state, I thought I was fairly secure. That was a safe assumption. Making payments on my student loans was another matter entirely. My salary combined with my wife’s salary was sufficient to keep us barely in a middle class lifestyle. I kept asking for deferment on starting my repayment due to hardship and qualified each time. What was never explained to me was that the interest kept accruing on the principal during the deferment. Finally, the Bar Association came up with a program that gave legal aid and public defender attorneys, as well as junior prosecuting attorneys, a significant bequest of cash from its various investment account yields, enough to nearly pay my annual payment on my student loan. It was like manna from Heaven.

I rocked along until I suddenly began falling down stairs, falling down when I tried to walk in the fields (which I had to do as a part of my position), having excruciating pain in my lower back and down the backs of my thighs, pain in my lower legs and numbness in my lower legs and feet. I finally couldn’t stand it anymore and got my family doctor to refer me to a neurosurgeon. After several MRI’s it was determined that I had degenerative disc disease in my lower spine as well as some pretty bad arthritis between the discs. The surgeon recommended surgery to relieve the stress on the nerves coming out of the lower spine. I had all my vacation saved up for the last 2 years so I checked out of work and checked in to the hospital for what I thought was going to be a 5-6 week surgery/recovery. Now, mind you, I am the world’s biggest chicken when it comes to surgery, specifically, anesthesia. I trace this back to my childhood. My mother was a nurse for 50 years until she retired 15 years ago. This incident occurred when I was around 8 or 10 years old. I had an appointment with the orthopedic doctor (this was in Panamá) which was 3 buildings over from where my mother worked. The doctor was going to saw off my cast. I had to sit in the area where my mother worked until time to go home, as she couldn’t leave until her shift was over. As I sat there, 2 doctors walked by chatting rather loudly, making no effort to keep their conversation secret. One of them, who must have been an anesthesiologist, told the other that when he put patients under for surgery, that was as close to being dead as they would come without being dead. That stuck with me since then and I only permitted general anesthesia once after that in my life, and I was 56 at the time.

When I woke up after surgery, I was delighted to note that, although I had a much different pain in my back, the old pain and the pain down the back of my thighs was gone. But the pain in my lower legs and feet and the numbness was still there. I was then transferred, after a three day stay in the hospital where my surgery was done, to a rehabilitation in-patient hospital. I spent a week there and began 5 weeks of out-patient rehabilitation therapy. At week 3, I had my follow-up appointment with my surgeon. My lower legs and feet were still killing me but my thighs and back were in good shape as far as pain went. I also was still falling down and my left leg had developed a weakness that it didn’t have before surgery, even with some rehabilitation. The surgeon had me go for another MRI to see what was wrong. When the results came back, he again checked and confirmed the weakness and told me that this was due to scar tissue forming in the area of the surgery, pressing on the main nerve trunk going to the leg. He had warned me that this was a possible consequence of the type of surgery I had. The pain in both my lower legs and the numbness from just below the knees down was something else he said.

He sent me to a neurologist and said he was going to conduct an Electromyography (EMG) test. I was also having some ‘leakage’ problems when I had to urinate. The neurosurgeon sent me to a urologist. I still was not back to work and I was out of vacation time. Our short-term disability policy started paying me at 100% of my salary and also paid for my medical insurance, fortunately. When I got to my appointment with the neurologist, he began the EMG. After he finished making my arms and legs jump around like some puppet, he disconnected me from all of his Frankenstein plugs and wires, pushed back and looked at me. How long have you been diabetic. What the Hell does that have to do with anything I’m thinking. I told him 15 years. He wanted to know how well my blood sugars were controlled and I told him that I never checked because I didn’t have anything to check it with, but when I went to my family doctor every 3 months he yelled at me about them but that was about it. He then told me that I had severe diabetic neuropathy in both my legs, the left worse than the right and moderate neuropathy in my arms. I was dumbstruck and blurted out something like I can’t have that because only old people have that. He gave me a small smile and told me that whatever I thought about my age (I was 57 at the time) and who could have diabetic neuropathy, I had it. And a pretty bad case, too. I asked him if it would ever get better, in my naiveté. He told me that neuropathy means that the nerves had died and when nerves are dead, dead is dead. I asked if the pain would subside, the numbness and was this the reason I kept falling down. He said that the pain was not going to subside nor was the numbness going to go away. Furthermore, the numbness and the falling down were 2 sides of the same coin. I didn’t know this, but our big toes are one of the principal inputs to our brain, along with our inner ear, for our balance. A huge portion of my input for keeping my balance was gone. Ergo, I fell down. And there was no compensatory mechanisms in the body to improve this problem.

I had follow-up appointments with both the surgeon and the neurologist for about 2 weeks out. The pain was agony and I was getting very depressed. Not to be a drama queen, but the pain, at times, felt like someone had opened my kneecap up and poured molten metal down the center of my leg all the way to my feet.When I got back to the neurologist, I told him, and I was deadly serious, that if this was the best that life was going to get that I was going to end my life. That I had already picked out the live oak tree beside the road to hit and at a speed that I knew the airbags wouldn’t do any good. He looked stunned and then quickly told me that there were two medications that helped block the pain of the neuropathy and that he wanted me to go to a psychiatrist he knew who worked with people who had long-term pain problems. He also referred me to a podiatrist he knew who I would need because diabetics need long term foot-care. When I went back to the surgeon, he said that in light of all of these problems, I would likely not be able to go back to work and that I should begin the process of Social Security Disability status. I told him about my long-term disability policy and he said that what ever I needed from a medical perspective, he would be happy to provide and coordinate with the other doctors. I just happened to mention my student loans and glumly said that I was going to have all that seized to make the payments on the stupid loans. He is the one who told me about the Student Loan Forgiveness Program for people who are totally and permanently disabled. For the first time in a long time, I thought I noticed a glimmer of hope in me.

Getting my self-paid long-term disability policy to begin paying me was a struggle. But I was seeing physicians now who could accurately and adequately document my conditions. After the medical records got there and the letters from my employer saying that I could not come back to work without a doctors release and the physicians they spoke with were unanimous in their opinions that I would not get a release, the payments started. But I had to apply for Social Security Disability according to the insurance company to keep getting my payments. They did, however, state that they paid for an attorney’s representation in this process. Finally, after 18 months from the time when I could no longer work, I was awarded Social Security Disability based upon my total and permanent disability status. I also discovered that I would not be eligible for Medicare for 6 more months, because it required my total and permanent status for 2 years from determination. Social Security placed my determination date at 6 months after I left work, because I applied immediately after the doctors told me that I probably would never work again. Fortunately, I still had my wife’s insurance that I was on carrying me for the last 6 months.

Student loans were another thing altogether. Much latter in the game, I discovered that the Student Loan Forgiveness for Total and Permanent Disability depended on a determination by Social Security of my Total and Permanent Disability status. If I thought the Social Security process difficult, it was a cakewalk compared to the Student Loan Forgiveness program. I did not know about the Total and Permanent Disability Forgiveness program of the Federal Student Loan program. However, I did know about the harassing phone calls, mailings and emails from the collectors contracted by the Federal Student Loan Program. I also learned that my credit was trashed by these same vile creatures. I repeatedly and patiently explained that I was totally and permanently disabled and collecting Social Security and I could not afford the payments Salliemae was demanding. I had consolidated my loans many years earlier and got a much lower payment as a result. Now, however, that payment simply exceeded my payment abilities on my current income. I kept asking for some adjustment in the payment or a suspension of interest or something. My $50,000.00 initial loan flew past $100,000.00 like a jet on a low-level bombing run: silent, fast and deadly. I finally called Salliemae and asked what I could do about the situation. I clearly and unmistakably told the young woman that I was totally disabled and on Social Security. Never once did I receive counseling on the Totally and Permanently Disabled Forgiveness Program. The only advice I received from her stated that I must have my account current before I could refinance and perhaps a refinancing would lower my payment. I was near tears of frustration. I hung up and considered my options. The only program I knew of as the one of dying and the loan is forgiven. If this keeps up much longer, I will be dead, I thought.

Still the collection calls came. With great dismay, I discovered Salliemae used not just one, but many collectors simultaneously in the debt collection process. The telephone rang constantly. I had never been afraid of my own telephone before, but I became afraid of it. Some of the collectors were polite, even sympathetic. That still didn’t deflect them from their primary purpose: make me pay Salliemae. Others outrageously abused me. Some of their tactics included swearing, threatening, calling me a deadbeat, etc. were all contained in their repertoire of abuse. Before I couldn’t work, I was a poverty lawyer advising clients about dealing with people like these and calling the debt collectors up and reminding them of the Fair Debt Collection Practices Act. Now, they rattled me so that I frequently forgot this very large club for dealing with these pond-scum. I called Salliemae again. No more help than the time before.

Now, however, a new twist appeared, one for which I was totally unprepared. Salliemae attached my Social Security check. The pittance left along with my wife’s modest salary left us well below the poverty line and with still gargantuan medical bills accruing. My brain shut down. The only thing I could think of was contacting my colleagues at legal aid. I knew we helped people with Social Security check attachments. I called and made an appointment with my former managing attorney. Arriving at the appointed time, she took me into her office and closed the door. At that point, I began sobbing hysterically. She asked what happened. She then reeled off a list of things like my wife and I splitting up (everyone in the office loved my wife and I knew she would think that a split was my fault), either one of us having a terrible disease, something happened to our son or grand children, etc. I kept shaking my head “No”, but it gave me the time I needed for calming down. I explained the circumstances and she responded with a statement something like but you’re totally and permanently disabled. I looked at her like an idiot. She asked if anyone at Salliemae explained the totally and permanently disabled forgiveness program. I said no they had not. She made the sound she always made when something irritated her and she buzzed her secretary (who is a sweetheart except when you cross her boss or her and then God help you). She asked her to get Salliemae on the line and find out what kind of paperwork they required other than a signed retainer agreement for an attorney’s representation of a student loan recipient. She also asked her that if they had some form they needed, have them fax it, we would fill it out and fax it back to them. In the meantime I filled out the rest of the paperwork required showing I qualified for legal aid and signed all the forms and the retainer agreement.

I heard an elevated voice outside the office door in the secretary’s office and knew someone had done what they shouldn’t and wouldn’t do again. In a few more minutes I heard the fax beep finished and then the secretary’s typewriter clattering away. In the meantime, my old boss and I caught up on things since I left. She told me how good I looked, having lost a great deal of weight. She had always dressed to the nines and had on what I thought was a new suit. I told her so and how good she looked in it. About that time, her secretary came in the office, showed my old boss the form, filled out (The woman never forgot anything. She had my Social Security number and telephone number and address filled in as well as my wife’s information and where I graduated from.), showed me where my signature went and my old boss’ signature, slipped out of the room and I heard the fax beep finished again. The secretary came in and gave me a big hug, asked about my wife and son and was suitably impressed when I told her that my son and his wife were expecting another child, my second grandchild. She then told me former boss that she now represented me to Salliemae and she could call if she wished. Me old boss asked her to get the Salliemae’s general counsel’s office on the line and the secretary slipped out of the room. A few minutes later she buzzed my old boss and, it seemed to me, smugly said the general counsel’s office was on the line. After the usual pleasantries we lawyers always exchange, she got on with the purpose of the call. The first thing she sprang on him (she later told my his name, but I have long forgotten it due to the medications I take) as a flat question about why his agents consistently violated the Fair Debt Collection Practices Act. I could tell this knocked him in the head because the phone was silent for a very long minute. When I heard some response, she said something to the effect of that he most definitely was responsible for the acts of his agents and that the Fair Debt Collection Practices Act most definitely did apply to a quasi-governmental agency. I heard a reply and my old boss responded not to wait past 1:00PM because she had the lawsuit papers drawn up, the Federal Courthouse lay just around the corner (it actually is more like 2 miles) and she alerted all her media contacts for a possible news conference at 2:00PM so they had time for getting the story out on the wire services and their network centers. I was very glad I made a 9:30 AM appointment.

At 11:30 AM we left for lunch, my boss’ treat. She told the switchboard that if the attorney for Salliemae called, tell him we would return at 12:30 PM and call back then. When we returned at 12:20 PM, the switchboard operator said she was happy we returned early because that man called 3 times even though I told him you would return at 12:30 PM. My boss laughed and said he was softened up and ready for the oven. Sure enough, at 12:31 PM the operator called the secretary (Who had returned with us from lunch along with most of the office. It was a great reunion and I was really glad almost everyone was there.) who buzzed through with a remark about the little snot was on the line. I only really heard one side of the conversation, but could hear crackling in the receiver when he spoke. My boss’ first words, after the initial pleasantries and his opening gambit, was that she told him that earlier. Longer crackling. My boss asked what we (lawyers always speak in the “royal” third person) needed doing in setting things right. Crackling. My boss said the first thing he must do is muzzle his hounds. The next is refund all of the confiscated (her words, I won’t forget them) Social Security checks. The third thing required compensation of her client for the repeated violations of the Fair Debt Collection Practices Act he suffered and those damages were treble damages. Finally, the matter of attorneys fees, provided for in the same act. I swear I could hear him choke over the telephone. I think he stammered out a counter-proposal. My boss replied that offer didn’t meet the Act’s terms. More choking and another proposal. My boss said she needed a consultation with her client and he could call back in 10 minutes. She hung up. My boss said he offered stopping the collection calls and letters that day, return of the total amount of the Social Security checks by Monday (it was Thursday) via courier, payment of $100.00 in damages for violation of the act when triple totaled $300.00 and a reasonable attorneys fee. She started chuckling and asked me what I thought about that and $3000.00 in attorneys fees. I said that all came out the way I wanted by I wanted the attorneys fees (I knew legal aid needed money all the time) set at $5000.00. She called the twerp back and said her client found the settlement satisfactory except for the attorneys fees which he wanted set at $5000.00, because he didn’t want any billing, including costs. Crackle. My boss said something like nice talking with you, too and hung up. After she hung up, she spat out, “Asshole.” That I do remember. That fast, we reached a settlement.

The total lack of presentation of all the options really rankles, even now, some 2 1/2 years later. The only thing the carrion eaters discovered that, not only was this program dependent on a determination of my total disability by the Social Security Administration, but that I had to wait 3 years after the determination of my total disability for my forgiveness grant. I could not have any income during that time. Well, thank God I had taken income tax during law school. Social Security and disability insurance payments are not considered income, but the disability insurance is not only if you paid for it yourself. If your employer paid for it or you had used a cafeteria plan “pre-tax” money to pay for it, it was taxable income. So I was eligible.

I am now coming up on the third year of my anniversary of the beginning of my Social Security payments and I will be eligible for discharge in about 6 weeks. So folks, there is another way besides dying to get your student loan wiped out. It will just make you feel like you are dying while you are completing the process.