Lawmakers push for clearer student loan forgiveness rules

Seven lawmakers urged a top Obama administration official to provide clearer rules for wiping out student loan debt when it may cause financial hardship to borrowers in bankruptcy.

The group of Democratic lawmakers on Friday urged Education Secretary Arne DuncanArne Starkey DuncanAmerica's religion of anti-racism reaches peak absurdity What the next Education secretary must do How Democrats learned to stop worrying and love teachers MORE to establish specific standards for determining whether repayment of a student loan is an “undue hardship” and eligible for forgiveness.  

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“Because federal law treats student debt as non-dischargeable in bankruptcy proceedings, borrowers can be burdened with this debt for a lifetime even if circumstances make it unlikely that the borrower will ever be able to repay,” they wrote.

They argued that the guidance would help the most vulnerable loan holders by bringing consistency to the department’s handling of undue hardship claims.

In turn, that would allow the Education Department to better focus its loan collection efforts on cases where there is a more realistic opportunity for recovery, they said.

Federal law allows some borrowers to have their loans forgiven even though courts have established a high standard of proof for eligibility.

“While we recognize the department’s prerogative to fairly collect on student loan debts owed to it, we do not find it sensible or cost-effective for the department or its contractors to engage in lengthy legal challenges and appeals against bankrupt student loan borrowers who have demonstrated a clear and legitimate inability to repay their loans,” they wrote.

Some of the lawmakers — Sens. Dick DurbinRichard (Dick) Joseph DurbinSupreme Court poised to hear first major gun case in a decade Protecting the future of student data privacy: The time to act is now Overnight Health Care: Crunch time for Congress on surprise medical bills | CDC confirms 47 vaping-related deaths | Massachusetts passes flavored tobacco, vaping products ban MORE (D-Ill.), Jack ReedJohn (Jack) Francis ReedRepublicans raise concerns over Trump pardoning service members Overnight Defense: Trump clashes with Macron at NATO summit | House impeachment report says Trump abused power | Top Dem scolds military leaders on Trump intervention in war crimes cases Top Armed Services Democrat scolds military leaders on Trump's intervention in war crimes cases MORE (D-R.I.) and Elizabeth WarrenElizabeth Ann WarrenTrump calls Warren 'Pocahontas,' knocks wealth tax Warren, Buttigieg fight echoes 2004 campaign, serves as warning for 2020 race Democrats battle for Hollywood's cash MORE (D-Mass.) and Reps. John ConyersJohn James ConyersThe Hill's 12:30 Report: Dems release first transcripts from impeachment probe witnesses Hispanic Caucus dedicates Day of the Dead altar to migrants who died in US custody Today On Rising: The media beclowns themselves on Baghdadi MORE (D-Mich.), Elijah CummingsElijah Eugene CummingsImpeachment can't wait Adam Schiff's star rises with impeachment hearings Tucker Carlson calls Trump 'full-blown BS artist' in segment defending him from media coverage MORE (D-Md.), Steve CohenStephen (Steve) Ira CohenThe Hill's Morning Report - Dem dilemma on articles of impeachment Lawmakers to watch during Wednesday's impeachment hearing Impeachment week: Trump probe hits crucial point MORE (D-Tenn.) and Hank JohnsonHenry (Hank) C. JohnsonBlack lawmakers condemn Trump's 'lynching' remarks Maloney to serve as acting Oversight chairwoman after Cummings's death The 13 House Democrats who back Kavanaugh's impeachment MORE (D-Ga.) — have introduced a bill that would restore the bankruptcy law to language in place before 2005 so that privately issued student loans will once again be dischargeable in bankruptcy like most other forms of private debt.

“Americans have accumulated $1.2 trillion in student loan debt, exceeding even the level of credit card debt in our nation," they wrote.

They specifically asked Duncan to issue guidance with respect to the collection of a federal student loan owed by a borrower who has filed for relief under Chapter 7, 12, or 13 of the federal bankruptcy code and who has requested that the bankruptcy court determine that the loan be discharged under the “undue hardship.”

“The need for action with respect to the student loan debt crisis is urgent,” they wrote.  

“The suggested guidance would benefit the most vulnerable student loan debtors in our population as well as the overall economy."