The history of Student Loan Debt has been a painful trail of crushing debt that has been largely exempt from bankruptcy discharge. For years, Congress has been unsympathetic towards the steadily growing student loan debt crisis since 1998 when it first made federal student loans virtually nondischargeable unless “undue hardship” was proven to the court - a nearly impossible position to prove. Additionally, in 2005, Congress also made most private student loans nondischargeable in bankruptcy. This has created a national crisis involving $1.5 trillion in student loan debt and student borrowers with little or no hope of ever being free of crushing debt they are unable to repay.
Statements by the bill’s authors include:
“Filing for bankruptcy should be a last resort, but for those student borrowers who have no realistic path to pay back their crushing student loan debt, it should be available as an option to help them get back on their feet,” said Durbin. “Our nation faces a student debt crisis, and it’s time to restore the meaningful availability of bankruptcy relief to student loan borrowers.”
“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. “The Student Borrower Bankruptcy Relief Act fully restores this protection, and I’m thrilled to work with Senator Durbin to fight for this legislation.”
Student loan debt has been the fastest growing segment of U.S. private consumer debt and is now second only to mortgages. This growing percentage of nondischargeable debt is stifling the career and life choices of many student loan borrowers and negatively affecting on the broader U.S. economy.
The principle that Americans should have the ability to start over financially through bankruptcy was enshrined in our Constitution by our founding fathers. Student loan borrowers with no realistic path to resolving their debt should have bankruptcy as an option to help them get back on their feet. We are hopeful that this bill will become law and free millions from what has become an overwhelming burden of debt.
If you are struggling with unmanageable debt, including student loan obligations, call attorney Chris Bush, at (619) 678-1134. He is an experienced bankruptcy attorney and consumer debt advocate. He’ll help you find the best solution to your debt burden and get back you on a track to financial freedom.