Wisconsin Man Fights to Shed Student Loans in Bankruptcy

Nov 4, 2015

A Waukesha man has filed a petition with the U.S. Supreme Court  in hopes of having his student loans written off in bankruptcy court. The case calls into question the different standards used across the country.

Mark Tetzlaff is far from typical when it comes to the severity of his student loan debt. He’s 57, and inching closer to retirement age, yet he still owes a lot of money.

“In terms of the balance, we’re now at about $285,000. It’s accumulating at something close to $950 a month,” Tetzlaff says.

Tetzlaff says nearly half his balance is interest, and he simply can’t afford to pay. “I survive, we survive here, my mother lives with me, we survive solely on her social security,” he says.  

Tetzlaff says there are multiple reasons for why he is so deeply in debt and unable to repay his college loans. He says the majority of them accrued while he was earning a law degree from a for-profit college in Florida, about 10 years ago. Since graduating, he’s taken the bar twice and failed. Along the way he’s dealt with substance abuse, depression and two misdemeanors, including one for intimidating a witness.

“The problem is, is that when you go out for any kind of a job they’re going to check your background. Most people will just jump to the worst conclusion that somehow some kind of weapon was possibly involved or whatever. And so I have been unable not only to secure any collateral type jobs like a paralegal or law clerk, but any kind of a job because they see that charge and simply don’t want to have anything to do with me,” Tetzlaff say.

Tetzlaff says he’s been trying since 2012 to convince bankruptcy court to discharge his student loans, but the standard Wisconsin uses may be too high for him.

Attorney James Wilton is working pro bono on the case. He says there are two tests states use to determine whether individuals are capable of repaying their student loans. Wisconsin uses the Brunner test which requires three things. Debtors must prove they cannot maintain a minimal standard of living, that the situation is likely to continue and that they’ve made good faith efforts to repay their loans.

Wilton says the other test considers more specific factors such as the person’s assets, number of dependents, medical conditions, job history and whether he or she is employable.

“Neither of them is easy, but the one creates a possibility for discharge of student loans. That’s the more lenient totality of the circumstances test,” Wilton says.

Wilton is asking the U.S. Supreme Court to apply the more lenient test. He says court could decide by January whether or not to take the case.

No matter what the justices decide, the problem is much bigger than one person incapable of repaying his student loans, according to Scott Ross. He’s executive director of the advocacy group One Wisconsin Now.

“We have 43 million people, including well over 800,000 in the state of Wisconsin who has student loan debt. The average graduate is getting out of a college in Wisconsin with nearly $30,000 of debt,” Ross says. 

Across the country student loan debt is at an all-time high. The amount outstanding is upwards of $1.2 trillion. Ross says because of the large numbers, he supports making it a bit easier to discharge student loans in bankruptcy. He says it’s not about getting out of paying for something, it’s about the economics.

“We’re seeing an entire generation of young people who are unable to make those purchases that define being a middle class person,” Ross says.

Ross says purchases such as cars and homes and saving for retirement and their kids’ college education.

“This student loan crisis is potentially the biggest economic threat facing the future of this country,” Ross says.

The most recent numbers show that about 11 percent of student loans are delinquent at least 90 days. But not many owe as much as Waukesha’s Mark Tetzlaff. According to the New York Federal Reserve, less than one percent of borrowers owe $200,000 or more.