50-year old Debtor owes over $230,000 in student loan debt, mostly from compounding interest. She obtained student loans, with an original principal balance of around $48,000, while earning an undergraduate degree, a Juris Doctorate degree, and a Master’s degree, all from the University of South Dakota. Debtor argues that she has been unable to obtain steady gainful employment and is therefore unable to repay her loan without undue hardship. Debtor argues that allowing her loan to continue to grow puts a mental and emotional burden on her and her family.
ECMC argues that Debtor’s unemployment is largely voluntary and that her educational background qualifies her for well-paying jobs. ECMC also argues that discharge is unnecessary because Debtor is eligible for an income-based repayment plan that requires payments of $0 per month unless and until she obtains gainful employment.
After finishing her final degree in 1993, Debtor consolidated all her educational loans with Great Lakes Higher Education Guaranty Corporation. At the time of consolidation her loan balance was approximately $48,817. Her consolidated loan has an interest rate of 9%. Debtor’s student loan was later assigned to ECMC. As of the date of trial, Debtor’s outstanding student loan
balance, including principal and accrued interest, was over $230,000. Shortly before graduating from her Master’s program, Debtor was hired as an attorney at East River Legal Services in Sioux Falls, South Dakota. Debtor provided free legal services to qualified individuals. Debtor was laid off from East River due to budget cuts in December of 1995, after roughly three years of work.
Debtor consistently made payments on her student loan of $410 per month
from 1994–1996 while she was employed with East River Legal Services. After
she was laid off in 1996, Debtor applied for various deferments. She started
making payments again when she was hired at the Taxpayer’s Research Council in
2000. Debtor applied for additional deferments at times when she or her husband
were unemployed. Debtor used up all available deferments. Eventually she was
no longer able to make payments and her loan went into default. According to her
loan payment history from 1994–2008, Debtor paid a total of $30,077.76 into her
student loan, of which $26,040.78 went to interest and $3,960.30 went to principal.
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