Lawyer's Large Student-Loan Debt Gets No Sympathy From Federal Court

The story of Mark Allen Jesperson, who tried to erase his student loans in bankruptcy, could serve as a cautionary tale for underachievers everywhere.

The U.S. Court of Appeals for the Eighth Circuit ruled today that Mr. Jesperson, a lawyer, must repay $360,000 in student loans, even though two lower courts had ruled that being bound to the “shockingly immense” amount of debt would, in effect, sentence him to “a debtor’s prison without walls.”

Mr. Jesperson’s staggering debt is something of an outlier when the average student-loan borrower leaves college with a debt burden of only $20,000. But going on to graduate or professional school can expose a borrower to much greater debts, as a New York Times profile of another heavily indebted lawyer showed last week.

Under federal law, a government-backed student loan can be discharged in bankruptcy only if paying it back would cause an “undue hardship,” meaning the debtor cannot now or in the future afford payments.

But a majority of the appeals-court judges had far less sympathy for Mr. Jesperson, whose “record of work experience is besmirched by a patent lack of ambition, cooperation, and commitment,” the judges wrote, quoting the bankruptcy court.

Mr. Jesperson attended three different colleges over 11 years before earning his bachelor’s degree at the University of Minnesota at Duluth. After four years at two more colleges, he earned a law degree and passed the bar on his first try, the court noted.

He started his legal career as a judicial clerk on the Pacific island of Saipan. He then worked as a lawyer with Alaska Legal Services and, later, as a legal temporary with Kelly Services Inc. He quit each job for “a variety of personal reasons,” the judges wrote.

At the time of his bankruptcy trial, in 2007, Mr. Jesperson was 43, unmarried, occasionally paying child support for two sons from different relationships, and working at another legal temporary agency on a project that paid $25 an hour. And Mr. Jesperson had not made any payments on his student loans.

Even though he was earning very little, Mr. Jesperson was eligible for a federal plan that would require him to make payments for 25 years based on his income, the judges ruled.

“Jesperson’s young age, good health, number of degrees, marketable skills, and lack of substantial obligations to dependents or mental or physical impairments weigh in favor of not granting an undue-hardship discharge,” they concluded. —Eric Kelderman