Seven Democratic members of Congress are pushing for clarity and lenience in how the Department of Education and its contractors forgive student loan borrowers who are bankrupt and unable to pay back their loan debt, the Chronicle of Higher Education reported today. "Because federal law treats student debt as nondischargeable in bankruptcy proceedings, borrowers can be burdened with this debt for a lifetime even if circumstances make it unlikely that the borrower will ever be able to repay," the members wrote on Friday in a letter to the education secretary, Arne Duncan. Under federal law, student-loan borrowers are unable to discharge their debt in bankruptcy unless they can demonstrate "undue hardship" in paying it back. Education Department contractors often block attempts to prove undue hardship, the letter argues, by "aggressively challenging" borrowers’ claims that they are unable to make payments. Signing the letter were Sens. Richard J. Durbin (D-Ill.), Jack Reed (D-R.I.), and Elizabeth A. Warren (D-Mass.), along with Reps. Steven I. Cohen (D-Tenn.), John Conyers (D-Mich.), Elijah E. Cummings (D-Md.), and Hank C. Johnson (D-Ga.).
http://chronicle.com/article/Education-Dept-Is-Urged-to/146679/
For further analysis and discussion of student loans and bankruptcy, be sure to attend ABI’s Student Debt Symposium on May 30 at the Georgetown University Law Center in Washington, D.C. To register, please click here: http://www.abiworld.org/SDS14