The Biden administration wants the Supreme Court to pass on an appeal seeking to ease the way for more borrowers to erase their student-loan debt in bankruptcy, saying the Department of Education is already examining the issue, WSJ Pro Bankruptcy reported. The reasoning was laid out in a court filing Friday by the Justice Department, representing the latest front in efforts from the White House, Congressional Democrats and the U.S. court system to address student-loan debt. An estimated 43 million Americans have federal student loans, the total amount of which has nearly doubled over the past decade to about $1.7 trillion. Student loans are difficult to discharge through a bankruptcy filing. To qualify for a bankruptcy discharge, borrowers must prove they face an “undue hardship” from their student debts, such a stringent standard that few even try. The Supreme Court is considering whether to hear an appeal from a Texas woman seeking to loosen those standards after she filed for bankruptcy at age 60 with about $345,000 in student-loan debt — about half of which represents fees and interest. Thelma McCoy’s lawyers are asking to apply a more forgiving test, used by bankruptcy judges in some states, that would make it easier for those in extreme financial hardship to discharge student loans in bankruptcy.
