New Law Could Allow Student Loans to be Discharged in Bankruptcy

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New Law Could Allow Student Loans to be Discharged in Bankruptcy

Sen. Dick Durbin has proposed a new bill that has an escape clause for people with student loans that are forced to carry the debt to their graves.

44,000,00 Americans owe on student loans. The amount owed is more than $1.5 trillion. The only kind of dent that exceeds this figure is  credit card debt. The act is supported by Sens. Tammy Duckworth, D-Ill. and Elizabeth Warren, D-Mass., and U.S. Reps. Jerrold Nadler, D-N.Y., and John Katko, R-N.Y.

The Student Borrower Bankruptcy Relief Act of 2019 was introduced last month would remove a section of bankruptcy law that makes student loans nondischargeable unless the you can show the loans present an “undue hardship.” If the act is passed, it would allow the loans to be treated like other forms of consumer debt. Senator Durbin stated, “We’ve created a standard for discharge that is so high that in a recent survey across the United States, they could only find four cases despite the millions of people who have student debt . . . that were discharged in bankruptcy.” “People literally carry this debt to the grave. We have millions . . . of Americans under the age of 50 who are still paying off student loan debt and many who have reached retirement age who are still facing these debts that are not discharged. I think it’s time for that to come to an end,” Durbin said. We all know that people who took out student loans intended on paying it back. But with the rise of tuition and interest rates on student loans, that has become next to impossible. The Senator hopes the is one that crosses party boundaries and the vast majority of the debt is owed to the federal government. The senator said he’s going to ask the judiciary chairman for a hearing on the bill because “it’s time to come to grips with this reality.” If he’s able to get the hearing, and then get the bill to the floor of the Senate, then Durbin believes there’s a chance to pass it.

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