Representative John Katko with Elise Stefanik and Richard Hanna visiting Fort Drum, New York.
In an effort to help those who are dealing with financial hardship, namely those struggling with student loan debt, a bipartisan bill was introduced in Congress at the start of May that would allow student loan debt to be dismissed in bankruptcy.
Renewing these efforts, Representatives Katko and Delaney introduced the bill in early May, dubbing it a bipartisan effort. This bill aims to ensure that student borrowers who file for bankruptcy wouldn’t be required to pay back their outstanding student loan debt and that lenders couldn’t send it to debt collectors.
After a precedent was set by the Supreme Court, federal law doesn’t allow student loan debt to be discharged in bankruptcy, although other forms of outstanding debt such as credit cards have the potential for discharge in bankruptcy. This law has apparently confused many borrowers, as over 27 percent believe that their student debt can be discharged in bankruptcy, according to a study by The Student Loan Report.
U.S. Representative John Katko is the lead Republican cosponsor of the Discharge Student Loans in Bankruptcy Act. Its main sponsor, Democratic Representative John Delaney, initially introduced the bill in 2015.
The bill introduction is evidence that more lawmakers are becoming concerned about the student loan debt that Americans are accruing which breached $1.4 trillion recently. That alarming figure is only expected to rise in the future, and it strains the economy in multiple ways. Many student debtors are forced to put off important milestones such as starting a family, purchasing a new house, or even buying a new car.
While filing for relief should be a last resort, politicians such as Rep. Katko and Delaney believe that carrying the burden of student loan debt even after declaring bankruptcy is unfair. This is actually one of multiple efforts undertaken by Capitol Hill's politicians, both Senators and House Representatives, to improve the financial position of student borrowers.
One of the most popular efforts stems from Senator Elizabeth Warren (D-MA). She has introduced her Bank on Students Emergency Loan Refinancing Act numerous times, but thus far, she has been met with failure. If successful, it would implement federal student loan refinancing.
The federal refinancing policy is so popular that other state legislatures have attempted to implement their own refinancing policies; the legislatures in Minnesota and Virginia are two recent examples of these efforts according to The Student Loan Report.
Reformative efforts on the student loan issue do not focus solely on federal student loan refinancing either.
In fact, some congressional actions attempt to establish protections against social security garnishment among older student debtors. Other politicians have attempted to expand loan forgiveness stipulations and protections for borrowers who attended closed down for-profit colleges.
At any rate, the student loan issue has not been ignored by all politicians, but progress is still slow, leaving many on Capitol Hill, and borrowers alike, frustrated with student loan debt.
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