Former U.S. Bankruptcy Court Judge Sarah Sharer Curley, who presided over cases for nearly three decades before retiring in 2014, has written a new book examining the relationship between debt, bankruptcy, and financial fairness in America. In recent commentary, she discussed how legal and policy changes are affecting Americans struggling with student loan debt and other financial obligations.
Curley highlighted a case that illustrated the challenges facing older borrowers with substantial student loan balances. A woman in her 70s appeared before her with over $584,000 in federal student loan debt accumulated since the 1970s. Despite living in poverty with only Social Security income, strict bankruptcy laws made it nearly impossible to discharge the debt. Curley ultimately granted partial relief by crediting seven years of public service, reducing the woman’s remaining repayment period to three years.
The broader economic context has shifted significantly in recent years. Personal bankruptcy filings exceeded 500,000 in 2025, representing nearly a 50% increase compared to three years earlier, according to the Administrative Office of the U.S. Courts. Curley attributes this surge to multiple factors, including job losses, medical emergencies, and inadequate wages despite low unemployment rates. She noted that many bankruptcy filers are employed but working as independent contractors or multiple part-time jobs without adequate benefits, living paycheck to paycheck.
Curley is particularly concerned about the implications of recent policy changes. She characterizes a bill passed in July 2025 as creating unrealistic federal loan caps that push students toward private loans at significantly higher interest rates. She provided an example where a $300,000 medical school loan at a 16% interest rate would require monthly payments of approximately $5,017 over ten years, with total interest exceeding $302,000. She predicts these unsustainable payment obligations will likely drive bankruptcy filing rates even higher in coming years.
The judge also noted that prior to 2025, there had been efforts by the Department of Education to work with borrowers unable to repay their loans through modified repayment plans and potential forgiveness programs. However, staffing changes have made it considerably more difficult to reach settlements with the department on debt relief matters.
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