Nitcher v. National Collegiate
Student Loan Trust, decided a few days ago, is another story of a heavily
indebted lawyer who attempted to have her student loans discharged in
bankruptcy.
Leslie Taiko Nitcher is a 38-year-old attorney who graduated from Willamette University School of Law and
passed the Oregon State Bar in 2008. She found it difficult to find steady work,
but she finally landed a law job that paid her $69,000 in 2018.
Nitcher took out federal student
loans and private student loans while she was in school. Although she made some
payments on her student-loan debt, she owed a quarter of a million dollars on
her loans ten years after she graduated. About $200,000 of that debt consisted
of federal student loans, which she managed by enrolling in an income-based
repayment plan (REPAYE). She pays $479 a month under that plan, which obligates
her to make monthly payments for 25 years.
Nitcher also owed $51,000 in private
student loans and she attempted to discharge these loans in bankruptcy.
Bankruptcy Judge Peter C. McKittrick was sympathetic to her plight and granted Nitcher
a partial discharge that requires her to pay only $16,500 on that debt, payable
in 110 monthly payments.
Here is how Judge McKittrick began
his opinion :
This adversary proceeding tells a far too common story of the plight of a professional swallowed by massive student loan debt, much of which she has no hope of repaying during her lifetime. In 2005, when Leslie Nitcher . . . enrolled in law school, it was with the hope and expectation her advanced degree would lead to a legal career at a level of compensation commensurate with the standard of living that lawyers historically have enjoyed. Instead, she faced a bleak job market when she graduated from law school in 2008.
The question before the court, Judge
McKittrick wrote, was "to what extent her student loan debt will remain a noose around her economic neck for the remainder of her economically productive
years."
Judge McKittrick finished his
opinion by explaining why he ruled as he did. "The reason I have concluded that the Student Loans should be discharged
is largely because Nitcher cannot survive if [her private-loan creditor]
garnishes her wages."
The Nitcher decision
is important because it is one of a growing number of bankruptcy-court
decisions in which judges acknowledge the heavy burden that many law graduates
face due to the tremendous amount of student-loan debt they accumulate during
their studies. In many instances, they simply cannot pay it back.
As Judge McKittrick put the matter,
Nitcher had “a noose around her economic neck." Unfortunately, Nitcher is
still obligated to make monthly payments of $479 a month under REPAYE, which
will not terminate until she is in her 60s. Thus, Judge McKittrick loosened the
noose around Ms. Nitcher's neck, but she will continue standing on the scaffold
for the next quarter of a century.
References
Nitcher v. National Collegiate Student Loan Trust, Bankr. Casse No. 18-31729-pem7 (August 23, 2019).