Pointing to the 44 million Americans who owe more than $1.5 trillion in student loan debt, Illinois Sen. Dick Durbin on Monday pushed for legislation that would wipe away a student loan borrower's debt if they declare bankruptcy.
The measure, titled the Student Borrower Bankruptcy Relief Act of 2019, looks to eliminate part of the bankruptcy code that makes student loans nondischargeable, "allowing these loans to be treated like nearly all other forms of consumer debt."
"Filing for bankruptcy should be a last resort," Durbin said in a statement, "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."
Durbin pointed to the history of the bankruptcy code, noting that before 1976, federal and private student loan debt were fully dischargeable, meaning they could be wiped out under a bankruptcy discharge. Credit card debt and medical debt, for example, can both be discharged through the bankruptcy process, while child support payments, alimony, overdue taxes and criminal fines cannot.
By 1998, federal student loans were made nondischargeable in bankruptcy, and in 2005, private student loans were included nondischargeable. "As a result, student borrowers who find themselves unable to repay their loans are now saddled with this debt for life," Durbin said.
"Our nation faces a student debt crisis, and it’s time to restore the meaningful availability of bankruptcy relief to student loan borrowers,” he said.
The measure was introduced last month by Sen. Elizabeth Warren and Reps. Jerrold Nadler and John Katko. Illinois Sen. Tammy Duckworth cosponsored the Senate bill.