The stinkiness of National Collegiate Student Loan Trust loans is something I’ve talked about for a long time. Attorney Austin Smith has been one of the leaders in the charge against these putrid private student loans.
The problem with the loans is how they originated, slicked, packaged, and sold to investors. Strictly speaking, the loans are hard, if not impossible, to validate, and should be able to be discharged in bankruptcy.
Attorney Austin Smith has been a leader in pushing for the demise of these loans or the proper legal treatment of them.
Out recently was a piece by Ian Frisch about Austin. It tells how he first fell into looking into the ability to discharge private student loans in bankruptcy and where it has led him.
Frisch is an entertaining writer and his piece on Austin Smith is well done.
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Here are some excerpts from the article on Smith.
“It was 2014, during his last year in law school, and every morning Smith forced himself to schlep to a local café a few blocks from campus. He was in his early 30s, a late bloomer, as it were, coming off unremarkable attempts both at working in politics and as a writer, and here he was, trudging up the street every cold New England morning, poring over his textbooks and worried he was too late.”
“That’s because, that morning, the local litigator told Smith he should write his article for the law review about student loan debt and bankruptcy.”
The seed was planted, and boy did it grow.
“The man kept hounding him. “Every day, it was the same thing: Hey, look at this, look at this, look at this,” Smith said. “And so finally, just to get him off my back, I started reading the stuff he dropped off for me, and as I was reading it, that’s when I was like, ‘This statute doesn’t say what everyone thinks it says,’” Smith told me. “Everyone has been getting this wrong for decades. How did this happen?”
“Deep in the code, Smith found vague legalese, “educational benefit,” that likely did not actually encompass any loan that provided an educational advantage. He spent two months digging through Congressional records and found that, in 1990, when this provision was written into the law, “education benefit” actually referred to specific grants, like healthcare for veterans, that the government used to issue. He was shocked because this line of the code had been protecting lenders — especially predatory big banks — for decades.”
To read the rest of the piece, click here.