New bill would bring relief to people who have student debt

New bill would bring relief to people who have student debt

On Behalf of | Aug 18, 2021 | Bankruptcy |

Residents of Maryland previously had difficulty declaring bankruptcy to eliminate excessive student loan debt. Now, there may be relief in the form of a bipartisan bill proposed by two senators. If you’re struggling with massive student loan debt, you should know about this measure.

What does the bill propose?

The bill, known as the Fresh Start Through Bankruptcy Act of 2021, was created by Senate Majority Whip Dick Durbin, a Democrat from Illinois, and Texas Sen. John Cornyn. If the bill passes, it would give individuals who have acquired student loans the opportunity to effectively qualify for a bankruptcy discharge to see relief from their debt. Currently, people have a difficult time being able to file for bankruptcy to eliminate student debt due to the requirement of proving undue hardship.

If the bill passes, individuals with significant student loan debt would no longer have to prove undue hardship. Sen. Durbin pointed out that student loan debt follows people to their graves and that the bill would provide much-needed relief to many who are unable to repay that debt.

What else would the bill do if passed?

In addition to making student loan debt dischargeable through bankruptcy, the Fresh Start Through Bankruptcy Act of 2021 would offer more. That includes the following:

• Eliminate the undue hardship requirement for discharging private student loan debt with bankruptcy and federal loan debt due for under 10 years.
• Require colleges with over one-third of students receiving student loans to issue partial refunds to the government if student loans are discharged through bankruptcy.
• Allow individuals who have no foreseeable way to pay back their student loan debt to do so through bankruptcy.

As the bill has bipartisan support, it’s very likely that it will be passed. This would bring enormous relief to countless people across the country who owe significant amounts of money in student loans.