Predatory Student Lending is Destroying the Middle Class. Here’s How We Stop It
When I was 27 years old, I declared bankruptcy.
I put up a CLOSED sign on the window of a business — my ice cream stores — that I had dedicated my professional life to. The next few months, I struggled with intense waves of anxiety punctuated every so often by gut punches of depression.
I had fallen so far after enjoying some intense highs as a young entrepreneur. My first business — an e-commerce site — had completely paid for my college tuition. The second business selling ice cream had yielded millions of dollars in sales. But I expanded too quickly and soon found myself in half a million dollars in debt with no hope of ever paying it off.
I looked around at the classmates from my undergrad class – successful bankers, consultants, even a few entrepreneurs – and felt like a big pile of wasted potential. Things would have stayed that way for me if bankruptcy wasn’t an option.
Bankruptcy is designed to give people a fresh start. It’s existed in English common law for centuries and allows anyone with significant debt to move on from that debt without being forced to pay it back over a lifetime.
You can’t have an economy that encourages innovation and risk-taking without allowing people to fail. There’s a reason we got rid of debtors’ prison – it’s better for the economy because it encourages people to try new things.
In my case, it worked. Free from decades of crushing debt, I was able to obtain an MBA in Boston, and eventually start a successful HR software company that serves thousands of customers all across North America, and has attracted venture capital from top-tier investors. I became a millionaire and created dozens of well-paying jobs for my employees.
And none of it would have been possible without the fresh start bankruptcy gave me.
In the United States, literally millions of Americans are in the same position I was – stuck with debt that, mathematically, is never getting paid off. Fifteen percent of student debt is currently in default, and 40 percent is not being paid on its originally agreed upon schedule.
Inflation adjusted incomes have risen about five percent in the last thirty years while inflation adjusted student debt levels are up a staggering 200 percent. In short, predatory student lending is squeezing the middle class out of existence. It’s no wonder terms like “I just can’t adult today” have entered the lexicon. For someone buried under six figures of debt for an undergraduate degree, everyday tasks — doing laundry, making a doctor’s appointment— can seem overwhelming. This debt is preventing people from starting families, buying houses, and living a normal life.
Worst of all, this population has been led to believe — by nefarious or at the very least ignorant legal professionals and student lenders — that “student loans can’t be included in bankruptcy.”
Guess what? It’s complete garbage.
Student loans can be included in bankruptcy under certain circumstances, and millions of Americans can have access to the fresh start they’re entitled to.
I helped start Lexria to empower this to happen. There are over a million Americans with significant student debt who have already declared bankruptcy, but not attempted to have their student loans included – because of the false narrative created by those with other interests.
And like me, these people have potential.
Buried under the mountain of student debt are people with billion-dollar startup ideas. People who want to create art and music. People who want to cure cancer. People who want to start families. None of this potential will be realized if the status quo continues – if these people don’t have access to the fresh start that I did.
We’re here to make that happen – to unlock the potential of a generation of people burdened by predatory student lending.