The legislative prospects may be challenging, but 13 Senators want some student borrowers to have a bankruptcy option for debt relief, Fortune.com reported yesterday. President Barack Obama on Tuesday floated the idea of making it easier for student borrowers to get rid of some of their student debt through the bankruptcy process. Thirteen Democrats in the Senate acted on that suggestion yesterday when they introduced a bill dubbed the Fairness for Struggling Students Act of 2015 that will treat student loans issued by private banks the same as other types of private unsecured debt in bankruptcy proceedings. If the bill defies the legislative hurdles it faces in a Republican-controlled Congress and becomes law, it will cover only a small chunk of student loans. Private banks issue about 10 percent of all student loans, and only those would be eligible for discharge in bankruptcy. The federal government issues the remaining 90 percent of student loans, and they would remain relatively untouchable.
For further analysis of current legislation focused on student loans and bankruptcy, be sure to register for Wednesday’s ABI Live Webinar, “New Developments in Student Loans.”
