A bankruptcy judge has ruled in favor of a Maryland resident who claimed she could not repay her student loans because her Asperger’s syndrome prevents her from holding a job.
Carol Todd, who attended the University of Baltimore School of Law in the 1990s before dropping out, successfully made the case that her disability prevented her from repaying the nearly $340,000 she owed in student loans.
In order to relinquish the debt, Todd had to prove she would suffer “undue hardship” if forced to repay her student loans—a condition that is extremely difficult to demonstrate. In deciding in Todd’s favor, Judge Robert Gordon, a bankruptcy judge for the District of Maryland, acknowledged Asperger’s—an autistic spectrum disorder that is typified by problems with social interaction—as a disability that could prevent Todd from repaying her loans.
“To expect Ms. Todd to ever break the grip of autism and meaningfully channel her energies toward tasks that are not in some way either dictated, or circumscribed, by the demands of her disorder would be to dream the impossible dream,” Gordon wrote in his judgment.
Todd’s educational history is a mixed bag. According to the Baltimore Sun, she received her high school equivalency degree, or GED, at age 39. She then earned her associates degree and multiple bachelors degrees, eventually enrolling in the University of Baltimore School of Law as well as taking online classes at an unaccredited university. Todd dropped out of law school, but received a Ph.D. from the online school as well as a master’s degree from Towson University.
Despite those degrees, Judge Gordon said that Todd’s Asperger’s prevented her from getting a job and maintaining a minimal standard of living. As a result, she was forced to file for Chapter 7 bankruptcy in 2009. According to The National Law Journal, at the time of her trial in November 2009, she was 63 years old and owed $339,361 to three student loan creditors.
Aside from the large sums and implications in the mental health community, what makes Todd’s case newsworthy is that unlike other types of debt — including credit cards, car loans and even gambling debt — unpaid student loans are nearly impossible to discharge in bankruptcy.
But that wasn’t always the case. Before 1976, all education short term loans were dischargeable in bankruptcy, like nearly most other types of debt. That year, Congress altered the bankruptcy code so loans made by the government or by a non-profit college or university could not be discharged during the first five years. The bankruptcy code was altered again in 1984 made it so all private student loans were excepted from discharge as well.
Then, in 2005, Congress added an amendment to the Bankruptcy Abuse Prevention and Consumer Protection Act that made it so no student loan, federal or private, could be discharged in bankruptcy at any point unless the borrower can prove repaying the loan would cause undue hardship — as Todd did. In practice, it almost always takes a significant physical or mental disability to prove undue hardship under the current law.
But Todd’s case is a rarity. The difficulty of proving undue hardship—the majority of claims are unsuccessful—and of discharging student has prompted the National Association of Consumer Bankruptcy Attorneys to call on Congress earlier this year to pass legislation that would allow graduates to discharge loans they took out from private lenders, including for-profit companies like banks and student loan giant Sallie Mae. Similar legislation has been submitted over the past two years by Congressional Democrats without making much progress; NACBA is hoping this year will be different.