Higher Ed Policy Roundup: Vol. 5 - Issue 28
This Week in Washington
This Week in Washington
On Tuesday, the Senate Judiciary Committee held a hearing titled “Student Loan Bankruptcy Reform” during which Christopher P. Chapman, President and CEO of AccessLex Institute, testified. The hearing focused on the high cost of postsecondary education and how the Bankruptcy Code has made it nearly impossible for struggling borrowers to discharge student loan debt. In his opening remarks, Chapman noted that the Brunner test (a test used to determine whether a borrower has shown an undue hardship) “effectively morphed from an arguably appropriate basis for analysis and application of the law to an overly strict and uneven exercise for the small percentage of people who successfully navigate the procedural hurdles, serving to frustrate the underlying goals of both the Higher Education Act and the Bankruptcy Code.” You can watch the hearing here.
A group of bipartisan lawmakers sent a letter urging Education Secretary Miguel Cardona to discharge the student loans of disabled borrowers who qualify for a Total and Permanent Disability (TPD) discharge but have not yet received it. Student loan borrowers who are determined to be totally and permanently disabled may receive a TPD discharge of their federal student loans. However, because of some inconsistent procedural rules, hundreds of thousands of borrowers have not received the benefit. The letter calls on Cardona to expedite the discharges and to make the changes necessary to eliminate the inconsistent procedural rules. In March, AccessLex similarly urged ED to automatically discharge the student loans of eligible borrowers.
The following bills have been recently introduced for consideration by the 117th Congress (2021-2022):
H.R. 2598 – Fostering Responsible Education Starts with Helping Students Through Accountability, Relief, and Taxpayer Protection (FRESH START) Through Bankruptcy Act [Sen. Dick Durbin (D-IL)] would allow certain student loan borrowers receive bankruptcy discharge for federal student loans after waiting ten years. It would also establish a new cost-sharing structure that requires certain colleges to repay a portion of discharged federal loans back to the government.
S. 2596 – Leveraging Opportunities for Americans Now (LOAN) Act [Sen. Marco Rubio (R-FL)] would eliminate interest on federal student loans and replace it with a one-time, non-compounding financing fee that borrowers would pay over the life of the loan.
H.R. 4797 [Rep. Troy Carter (D-LA-2)] would direct the Secretary of Education to discharge up to $50,000 of Federal student loan debt for each borrower.
H.R. 4725 – No Student Loan Interest Act [Rep. Eric Swalwell (D-CA-15)] would eliminate and forgive all interest charges on existing federal student loans and eliminate all interest charges on future federal student loans by enacting a zero percent interest rate.
H.R. 4724 – Strengthening Loan Forgiveness for Public Servants Act [Rep. Eric Swalwell (D-CA-15)] would allow borrowers to receive forgiveness under the Public Service Loan Forgiveness program in proportion to their years of public service.