American citizens currently owe $1.77 trillion in student loan debt, 93% of which is owed to the federal government, according to Upsolve. This nonprofit firm, which assists low-income individuals in filing for bankruptcy free of charge, has been able to help more than 13,000 users eliminate over $750 million in loans through its debt relief tools since 2017. However, until recently, these tools weren’t equipped to facilitate relief from student loan debt due to specific complexities in bankruptcy law.
Upsolve’s co-founder and CEO, Jonathan Petts, has revealed that approximately 32% of the platform’s users had significant student loan debt. It was a common scenario for these individuals to still carry thousands of dollars in student debt even after a Chapter 7 bankruptcy facilitated by Upsolve, inhibiting them from achieving a fresh start.
That was until last week when Upsolve launched its new student loan discharge tool, developed in collaboration with Philadelphia Legal Assistance and funded by a 2023 Legal Services Corporation Technology Initiative Grant. Since its launch, the innovative mechanism has been used in 102 cases seeking relief from student loan debt. Nine of these cases have already been approved, while 93 remain in progress.
Hardship Exemptions
This newfound capability was made possible by a November 2022 guidance published by the U.S. Department of Justice, clarifying the discharge of student loans in bankruptcy cases. Previously, a lack of clear standards and conflicting interpretations of the law made relief from student debt in bankruptcy cases a challenging endeavor.
The newly issued guidance specifies how to obtain a hardship exemption, which allows Upsolve to develop a tool adhering to these standards. Ben Jackson, Upsolve’s chief product officer, stated on the tool’s development: this work is deeply personal to him, having been through the challenges of bankruptcy and substantial debt himself before graduating from Chicago-Kent College of Law and joining Upsolve.
Guided Interview
The student loan relief tool supplements Upsolve’s core Chapter 7 relief tool, guiding debtors with outstanding student loans through the additional steps necessary for loan discharge. The tool commences with a short question-based eligibility assessment for the hardship exemption and proceeds to guide users through the process of providing required information and offers insights into each step’s purpose.
Through the tool, users will also be able to compile all the necessary information into the forms required to file for the hardship exemption, with a detailed checklist to assist in navigating the filing process and following up on submitted documents.
Sense of Freedom
The recent launch saw testimonies from three individuals who successfully obtained debt relief using Upsolve’s tool. Those who have achieved debt relief mentioned a newfound sense of freedom and an end to sleepless nights worrying about their loan repayments.
To learn more about the development of this tool, a recent episode of the Talk Justice podcast, Upsolve’s New Student Debt Relief Tools, further explores its creation and functionality. In the episode, Ronald Flagg, president of the Legal Services Corporation, interviews Jackson and Jonathan Pyle, contract performance officer at Philadelphia Legal Assistance, about their role in conceiving the tool and securing grant support for its construction.