Illinois Senator Dick Durbin has introduced a bill that would allow student loan borrowers to discharge their debt through bankruptcy.
The FRESH Start Through Bankruptcy Act of 2021, co-sponsored by Republican Senator John Cornyn of Texas would create the ability for student loan borrowers o seek a bankruptcy discharge for federal student loans after a waiting period of ten years. Currently, federal student loan borrowers are only allowed to discharge their student loan debt in extremely rare, stringent circumstances.
Durbin says it’s a way to help the 45 million Americans holding $1.7 trillion in student loan debt: “The average student borrower now carries $30,000 in debt, and many, especially those who are swindled by the for-profit colleges owe well over $100,000. Americans of all ages are plagued by the debt. For some, it’s holding them back from buying their first home, starting a family or a business. For others, it means delaying retirement because of this debt. This is not an individual misfortune. The student debt crisis is a threat to our economy. Federal Reserve Chairman Jerome Powell has warned that student loan debt may be a drag on our economy by preventing Americans from basic, fundamental consumer purchases – cars, savings accounts, retirement – otherwise the economic growth of our country.”
Durbin is also currently working with the Senate Judiciary Committee on reforming bankruptcy law to allow student loans to be discharged. Senate Bill 2598 was introduced to Congress on Wednesday and is currently awaiting action in the Senate Judiciary Committee.