WASHINGTON, D.C. – The Center for Responsible Lending (CRL) has announced support for legislation introduced today by Senator Dick Durbin (D-Ill.), the Student Borrower Bankruptcy Relief Act of 2019. This bill would eliminate the section of the federal bankruptcy code that makes student loans nondischargeable.
CRL Senior Policy Associate Cheye-Ann Corona issued the following statement:
While many graduates strive to repay their debt in a timely manner, thousands of others struggle to make ends meet. That is why it’s important to have legislation that will provide vulnerable student loan borrowers who cannot repay their debt with a pathway to reestablish their financial stability. While filing for bankruptcy should only be used as last resort, it should be an option for students to get back on their feet.
Congress must act now to provide student loan borrowers with options to alleviate their debt. Otherwise, millions of Americans will continue to delay or forgo purchasing homes, becoming entrepreneurs, and starting families; thus, negatively affecting the economy.
- More than 44 million Americans owe about $1.5 trillion in student loan debt;
- About 11 percent of student loan debt was in default or seriously delinquent at the end of 2018 according to the New York Fed;
- Prior to 1976, federal and private student loans were both dischargeable in bankruptcy;
- Most forms of consumer debt, such as credit card debt, mortgages and medical debt, can be liquidated in bankruptcy. Only certain kinds of debt, such as student loan debt, cannot be discharged in bankruptcy.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Vincenza Previte at email@example.com.