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Lawmakers Reconsider Bankruptcy for Student Loans

June 26, 2019
 
 

Democrats on the House Judiciary Committee put a renewed focus in a hearing Tuesday on whether student borrowers should have access to bankruptcy relief.

Restrictions passed in 2005 blocked both private and federal student loan borrowers from discharging their debt through bankruptcy. But the growing volume of student debt and the issue's salience as a campaign issue has fueled interest in legislative solutions like access to bankruptcy.

Rep. Jerrold Nadler, a New York Democrat and the committee's chairman, has introduced legislation along with Sen. Richard Durbin, an Illinois Democrat, called the Student Borrower Bankruptcy Relief Act that would eliminate current restrictions on student debt in the bankruptcy code and treat student loans like other types of consumer debt.

"This Subcommittee last considered such relief more than 10 years ago and, unfortunately, the problem of crushing student loans has only worsened," Nadler said in a statement at the hearing. "Currently, 45 million Americans owe student loan debt estimated at a total of $1.5 trillion, an amount that exceeds outstanding credit card and auto loan debt combined."

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