- Heather Smart filed for bankruptcy to get rid of her nearly $100,000 student-debt load.
- She argued she cannot pay off her debt due to a series of surgeries and cancer treatments.
- The Education Dept. opposed her request but will wait to go to court until after Smart undergoes treatment.
The Education Department is waiting for a student-loan borrower to receive cancer treatment before taking her to bankruptcy court.
On Monday, a US bankruptcy judge for the Southern District of Texas signed off on postponing Heather Smart's hearing to get rid of her nearly $100,000 student-debt load through bankruptcy. As The American Prospect first reported, Smart consolidated her federal loans in 2018 from attending New Mexico Junior College and Eastern New Mexico University, according to the court filing. She now holds a $95,181.92 student-debt load from the associate's and bachelor of science degrees she received in 2008 and 2010, respectively.
Per the December filing, Smart is currently unemployed because she is "in the process of receiving extensive medical care and treatment for myriad issues relating to several forms of aggressive and invasive cancer, as well as a blood disorder." Due to a series of surgeries and treatments over the next few months, she says she will be unable to maintain employment, and therefore, unable to make sufficient income to pay off her student-debt load.
She said she may be "permanently disabled as a result of the treatment." However, the Education Department wrote that when Smart's "health improves, she has college degrees and is capable of maintaining full-time employment and can maintain an appropriate standard of living while repaying her loans." For this reason, it said, Smart does not qualify for a discharge of her debt through bankruptcy.
Smart was originally supposed to appear in court on Tuesday, but the court postponed her hearing to June 6 because she is submitting a Cancer Treatment Deferment Request form to the Education Department, requesting her loans are deferred until her health improves and she is able to return to full-time employment.
The Education Department continues to oppose borrowers' claims of "undue hardship" and attempts to discharge student debt
As Insider previously reported, despite promising reforms to the bankruptcy process, the Education Department is continuing to oppose borrowers' requests in court. A department spokesperson previously told Insider that "borrowers in financial distress should have the ability to discharge their student loans through bankruptcy, but too often the process leads to unfair results. The Department of Education is committed to revising its approach to bankruptcy to streamline the process and ensure that borrowers get a fair shot."
To achieve loan forgiveness through bankruptcy, borrowers must meet the "undue hardship" standard established in a 2005 law, which requires borrowers to prove that they cannot maintain a minimal standard of living, that their circumstances aren't likely to improve, and that they have made a good-faith effort to repay their debt.
Smart is one of the many borrowers who said they met that standard, but courts, and the department, have frequently ruled against borrowers, which is why Federal Student Aid head Richard Cordray said last year the process "doesn't work well" and will be reformed.
But reforms have yet to be implemented, and the department is continuing to file oppositions, and even appeals, to block loan forgiveness. That's why some advocacy groups called on the department to halt all oppositions until reforms to the bankruptcy process are implemented.
"It's outrageous that other people get to declare bankruptcy but students can't," Senate Majority Leader Chuck Schumer said in February.