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Student loans -- discharge, negotiate or mediate?

In my last post, I suggested that fatherhood is an all or nothing proposition.  Apparently, student loan agencies are taking the same position in regard to repayment of student loans.  I have a client who defaulted on her student loans and hundreds of thousands of dollars of penalties and interest (yes, hundreds of thousands) have accrued.  This didn’t matter to her while she was unemployed, but now that she has a good paying job, the lenders want her to pay back everything.  She wants to repay the loans and interest, and is able to do so, but she could not repay the penalties (and interest on them) if she lived to be 200.  If she doesn’t pay, the lenders have threatened to sue her and report her default to the agency that grants her professional license.  If that happens, she could lose her job.  Who benefits then?  The only option they have given her is that they will waive penalties if she makes payments equal to the current monthly interest for 9 consecutive months.  Her job is not that well-paying.  I suggested that they waive the penalties and interest on them if she makes reasonable principal and interest payments on the original loans for 9 consecutive months.  The lenders said no, their hands are tied.  The only sensible thing I can suggest to my client is that she file a Chapter 13 Bankruptcy and then file an adversary hearing to determine whether she is eligible for a hardship discharge.  (Note: the U.S. Supreme Court is reviewing a 9th Circuit case that says an adversary proceeding is not necessary. United Student Aid Funds, Inc. v. Espinoza, 08-1134.)   In the meantime, she is not paying.

It seems to me that the only win-win scenario is to negotiate or mediate a payment plan that would result in waiving the penalties after the debtor makes reasonable, realistic payments for a certain period of time on the original principal and interest.  That is what some courts are suggesting that mortgage lenders do before foreclosure.  That is what municipalities will have to do under Wisconsin’s Smart Growth law that takes effect next year.  Why are students and student loan agencies the only ones who are not allowed to reach a win-win resolution?