Biden simplified the bankruptcy process for student loan borrowers, resulting in $158,182 being cleared for this woman who initially thought it was a joke.

• Last December, like many others, Hughson filed for bankruptcy.
• She joined a smaller group of people who had their federal student debt cancelled in court.
• Hughson, 58, said, "I thought it was a joke when I found out the U.S. Department of Education no longer held me responsible for my $158,182 debt."

In December, Hughson Mishima filed for bankruptcy, becoming one of the many Americans to do so annually.

Hughson, a Roanoke, Virginia, resident, also joined a smaller group of individuals who have successfully had their federal student loans discharged in court. The U.S. Department of Education determined that Hughson was no longer liable for her $158,182 debt.

"I believed it was a jest," Hughson, 58, remarked. "I was taken aback."

For years, it has been challenging for borrowers to discharge their federal student debt through bankruptcy, with policymakers setting a high bar to prevent young people from avoiding their responsibilities.

Government lawyers mostly denied requests to prove "certainty of hopelessness" for student loans between 2011 and 2019, according to U.S. lawmakers. Over 99.8% of borrowers who filed for bankruptcy did not have their student loans discharged during this time period.

A five-day return to office is unlikely, Stanford economist says.

That's now changing.

The Biden administration has updated its bankruptcy policy to treat student loans as other types of debt, making the process less difficult for borrowers, according to experts.

"The government previously fought discharge aggressively in almost every case, but now there is a policy to agree when the borrower can demonstrate financial need and a history of good faith efforts to repay loans," stated Latife Neu, a bankruptcy lawyer in Seattle.

Neu stated that he had assisted multiple individuals in utilizing the enhanced capability.

Malissa Giles, the bankruptcy attorney who represented Hughson in Virginia, stated that she has assisted numerous borrowers in obtaining student debt relief under the Biden administration's new policy. In total, these clients have received over $1.25 million in relief.

Giles stated that we have discharged student loans ranging from $6,500 to $203,983 for debtors with varying income levels.

A fair lending system requires robust bankruptcy protections, according to consumer advocates.

Mark Kantrowitz, a higher education expert, stated that lenders are more likely to adopt borrower-friendly policies, such as compromising with borrowers who face severe financial challenges, if they know they are at risk of losing a loan through bankruptcy discharge.

'I was not realistic about how little teachers made'

In the 1990s, after graduating college with $35,500 in debt, Hughson became a public school teacher in Virginia. Despite earning a salary that started at $30,000 and never exceeded $50,000 over her 10-year teaching career, she remained committed to her profession.

"Hughson stated that he had an unrealistic expectation that he would obtain a fantastic job after graduation and be able to repay his debt, but he failed to consider the low earning potential of teachers."

At the time, Hughson was a single parent raising two children and struggling to pay her monthly student loan.

She stated that she applied for the maximum number of deferments possible.

The government has the power to collect federal debts through extraordinary means, including garnishing wages, seizing tax refunds, and taking Social Security retirement benefits.

""Wage garnishment and other aggressive collection methods for recovering defaulted student loans can limit a borrower's ability to pay for basic necessities, such as housing, food, and medical care, forcing them to rely on credit cards and other forms of debt to meet their basic living expenses," Kantrowitz stated."

After the garnishment, Hughson's financial situation deteriorated, leading him to use credit cards to pay his bills, resulting in a balance of over $30,000 across his cards.

She quit teaching in her 40s to pursue other opportunities that could provide higher earnings. She took on various jobs, including one that involved assisting adults with learning disabilities.

Despite her income increasing slightly, her debt consumed almost all of her gains. Over time, her student loan debt grew to more than $150,000.

She paid herself and spent the remaining $100 on her mushrooming credit card balances.

She remarked that it was an endless loop.

Last year, she decided to finally file for bankruptcy.

""I was trapped in a situation I couldn't escape from, but now I'm liberated," Hughson declared."