Sen. Sheldon Whitehouse (D-R.I.) slipped a potential gift for debt-laden graduates into his proposal to tweak the consumer bankruptcy rules: a provision allowing those with crushing medical bills to eliminate their student loan debts too, the Wall Street Journal reported on Friday. "The Medical Bankruptcy Fairness Act" introduced by Sen. Whitehouse would allow people to get rid of their student loan debt if they have paid more than $10,000 in medical bills during the three years prior to filing for bankruptcy. Prof. Daniel Austin of Northeastern University School of Law, co-author of ABI's Graduating with Debt, estimates that more than half of the people who file for bankruptcy today have enough medical debt to qualify for the student loan discharge. Prof. Austin’s past research shows that about 30 percent of people who file for bankruptcy with medical debt also have student loans. The bill's prospects for passage are currently unfavorable.
To read the bill text of S. 2471, the "Medical Bankruptcy Fairness Act of 2014," please click here.
To purchase a copy of ABI's Graduating with Debt: Student Loans under the Bankruptcy Code, please click here.