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Student DebtLaw School Debt, ‘Hopelessness’ And The Supreme Court

There’s a court case happening right now that could be revealing a glimpse into the dark future of many current law students and recent grads. Mark Tetzlaff attended the Florida Coastal School of Law, where he earned a J.D. Now, 10 years away from retirement age, Tetzlaff is still grappling with close to $300,000 in law school debt. He’s called upon the U.S. Supreme Court for help.
Tetzlaff is currently seeking for his debt to be discharged in bankruptcy under “undue hardship.” The U.S. Court of Appeals in the Seventh, Eighth, and First Circuits are all considering and debating if Tetzlaff’s debt falls under the “undue hardship” category.
The reason why this is significant now is Florida Coastal is one of the for-profit schools owned by Infilaw, which is at the center of current debates on how law school cost and debt should be handled. For Florida Coastal’s 2014 class, 93% graduated with debt. The average debt amount was nearly $163,000.
Tetzlaff’s lawyer, James Wilton of Boston-based law firm Ropes & Gray, told Bloomberg BNA that the most recent class to enter Florida Coastal had a median LSAT score that “was in the bottom 25%, which means that these are students who are marginal at best.”
And marginal grades don’t lead to lucrative jobs. “And so when you’re in that kind of a situation, it cries out for what the bankruptcy code calls a fresh start,” Wilton claims.
According to Bloomberg BNA’s reporting, Tetzlaff failed the bar exam for the third time this past summer and is living “below the poverty line on social security.”
The argument against Tetzlaff’s case is what the Seventh Circuit found—there is no “certainty of hopelessness.” Or in other words, Tetzlaff has no disability or any other “hardship” that should keep him from finding a job to work towards paying off the debt. The court also argued Tetzlaff hasn’t “made a good-faith effort to repay” the debt.
But apparently in the Eighth Circuit—which is Arkansas—“multiple factors” are considered when making an “undue hardship” status. So, Tetzlaff might soon be moving to Arkansas.
Source: Bloomberg BNA

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