Congress weighs bankruptcy relief for student loan debt
More than 40 years after Congress began tightening restrictions against discharging student loan debt in bankruptcy, federal lawmakers Thursday introduced a bill to provide bankruptcy relief for struggling borrowers.
The Student Borrower Bankruptcy Relief Act of 2019 would remove the 2005 section of the bankruptcy code that made all private and federal student loans exempt from discharge in bankruptcy court.
The bill, co-sponsored by Sens. Dick Durbin, D-Ill.; Elizabeth Warren, D-Mass.; and U.S. Reps. Jerry Nadler, D-N.Y., and John Katko, R-N.Y., was introduced amid growing concern over more than $1.5 trillion in outstanding student loan debt held by some 44 million Americans and 3,000 payment defaults a day in 2016.
The lawmakers cited analyses by the Federal Reserve that concluded the impact of student debt is trickling down to the broader economy as it affects the lifestyle and career choices of borrowers, forcing many to delay decisions such as homeownership and starting a family.
Saying the U.S. is facing a student debt crisis, Durbin said it is time to provide relief for those unable to repay their student loans.
“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,” he said.
Deb Erdley is a Tribune-Review staff writer. You can contact Deb at 724-850-1209, [email protected] or via Twitter .