Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

Friday, May 13, 2016



From Wikipedia, the free encyclopedia
Lemon laws are American state laws that provide a remedy for purchasers of cars and other consumer goods in order to compensate for products that repeatedly fail to meet standards of quality and performance. Although there may be defective products of all sorts ranging from small electrical appliances to huge pieces of machinery, the term "lemon" is generally thought of as applying to defective vehicles such as automobilestrucksSUVs, and motorcycles.
These vehicles and other goods are called "lemons". The federal lemon law (the Magnuson-Moss Warranty Act) was enacted in 1975 and protects citizens of all states. State lemon laws vary by state and may not necessarily cover used or leased cars, and other goods. The rights afforded to consumers by lemon laws may exceed the warranties expressed in purchase contracts. Lemon law is the common nickname for these laws, but each state has different names for the laws and acts.
There are two types of warranties. Express warranties are usually statements in writing such as those provided by the manufacturers in owner's manuals and other written sales or advertising materials, or by a sample or model. Implied warranties are broader in scope and assure consumers that the retail product would meet certain minimum standards of quality whereby the product is fit for use for the purpose intended. In each type the manufacturer assumes the liability and responsibility to correct the defect or to repurchase or replace the product. Typically, the existence, scope and consequence of express and implied warranties is a matter of state law, usually covered by Article II of the Uniform Commercial Code.
Federal lemon laws cover anything mechanical. The federal lemon law also provides that the warranter may be obligated to pay the prevailing party's attorney in a successful lemon law suit, as do most state lemon laws.


My good friend and fellow student loan blogger and published author, Professor W. Richard Fossey made a good point in his most recent blog where he stated: "... as everyone knows, the colleges and universities are charging more than their degree programs are worth and are often admitting far more students than the job market can absorb. This is particularly evident at the law schools, which are graduating about two new J.D.s for every job opening.  But it is also true in the field of education...." (emphasis added)


Fossey provided another striking point: "The universities are not penalized for charging too much for their programs or for admitting too many students. And state legislatures are not penalized for establishing more degree programs than the public needs. For example, Arthur Levine, in a scathing report on educational administration programs, estimated that more than half of them should be closed.


So there we have it... Colleges and educators alike over-selling college programs at the highest cost ever for tuition, with CEO's of both Public and Private Colleges making million dollar salaries while pushing the promise of a great job by becoming an "Alum".

Here is where a "Lemon Law" for getting a bad deal on your college degree program promises should come into play.  A Lemon Law for college loan holders could be something like this.... 

FIRST: If the graduate fails to get a job that they trained for within 12 months of graduating, they should not be forced to begin paying on the student loan debt for an additional 12 months, and the interest rate is zero and there would be no penalties for that 24 month period.

SECOND: If the graduate still is unable to obtain employment within their degree field after 36 months, then the student loan debt would be absorbed by the college or university, as part of the College Degree Lemon Law.  No penalties, no interest, no student loan debt!



This week I did a slight diversion from my blog topic on informing on bankruptcy and adversary proceeding....  I will try and get back to that in the next post.  But today I just had this thought hit me and had to write about it.  I was oversold on my education, and ended up not finding employment in my degree field, then ended up owing nearly $130,000.00 for a degree that I was told by educators was going to get me a great job with excellent pay.  It never happened!  My only escape clause came after 27 years of trying to pay back my student loan, when I finally filed bankruptcy and won a full discharge of my student loan under the "Undue Hardship Clause".  If there was a lemon law for colleges, perhaps me and many other graduates would have proven there were bad products being pushed on us? 


W. Richard Fossey: "Educational Credit Management Corporation v. Acosta-Conniff; A lifetime of Indebtedness is the future for most college borrowers" Accessible at:

Arthur Levine. Educating School Leaders. Education Schools Project, 2005. Accessible at


  1. A lemon law for student loans is a great idea, and these laws should be enforced by state governments, not the feds, because the state attorney generals have been a lot more aggressive in going after corrupt for-for profit colleges. Thanks for this very informative blog site.

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