Student Loan Borrowers Would Get Bankruptcy Relief Under New Bill
|thenorthstar||May 24, 2019|
Lawmakers are introducing a bill that would allow people with student loan debt the option of making bankruptcy relief available. The bicameral Student Borrower Bankruptcy Relief Act of 2019 was introduced by Senators Dick Durbin (D-Ill.) and Elizabeth Warren (D-Mass.), Representatives John Katko (R-N.Y.) and Joe Neguse (D-Colo.), and House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) on May 9.
Most forms of debt, like credit card and medical debt, can be discharged through the bankruptcy process, but student loans cannot, a press release noted. Under the bill, student loans would be treated like all types of consumer and medical debt. It would also eliminate “the section of the bankruptcy code that makes private and federal student loans nondischargeable,” according to the press release.
“Americans across the nation are facing crushing student loan debt that is preventing them from purchasing homes and living the true American dream. We must ensure that Americans are able to invest in their education and then go on to live quality lives without the cloud of rising debt hanging over their heads,” Nadler said in a statement.
Student loan debt in the US reached $1.49 trillion at the beginning of the first quarter of the 2019 fiscal year, according to the Federal Reserve Bank of New York. The total amount of student loan debt in 2018 was $1.47 trillion, NBC News previously reported. If the bill passes, borrowers who file for bankruptcy for their student loans would have to prove they “have no realistic path to pay back their student loan debt burden.” Congressman Neguse said lawmakers can no longer ignore the student loan debt crisis in the country.
"This legislation is just one measure we must pursue to solve the student debt crisis by providing meaningful assurance that student loan borrowers who find themselves in deep financial stress can have a second chance," Neguse said in a statement.
Senators who have supported the bill include Kamala Harris (D-Calif.), Amy Klobuchar (D-Minn.), Bernie Sanders (I-Vt.), Tammy Baldwin (D-Wis.), Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), and many others. Warren, a 2020 presidential hopeful who co-sponsored the bill, unveiled a comprehensive higher education plan last month that will help fund historically Black colleges and universities (HBCUs) and eliminate student loan debt if she is elected into office. “Long before I came to the Senate, I fought my heart out to keep student loans dischargeable in bankruptcy. But over and over again, Congress chipped away at this critical protection for student loan borrowers,” said Warren in a statement from the press release. “The Student Borrower Bankruptcy Relief Act fully restores this protection, and I’m thrilled to work with Senator Durbin to fight for this legislation.”
Some recent college graduates will leave school debt free. Robert F. Smith, a billionaire investor, said he would pay off the student debt acquired by the Morehouse College class of 2019 during the graduation ceremony at the college on May 19.
“We’re going to put a little fuel in your bus,” Smith said during the Morehouse College 135th commencement to the graduating class. “This is my class, 2019. And my family is making a grant to eliminate their student loans.”
About the Author
Maria Perez is a breaking news writer for The North Star. She has an M.A. in Urban Reporting from the CUNY Graduate School of Journalism. She has been published in the various venues, including Newsweek, Juvenile Justice Information Exchange, City Limits, and local newspapers like The Wave and The Home Reporter.