U.S. Rep. Hansen Clarke has recently introduced a bill to Congress asking them to cut student loans, forgive other student loans and to allow the discharge of student loans through bankruptcy.
As stated in an interview to Arron Foley:
"The legislation I'm working on right now, it would allow student loan debt to be discharged in bankruptcy, but it would be much more than that. We're also going to be looking at a way for the federal government to use savings to transfer much of the student loan financing to a grant-based way of funding education. We're also working on a package of bills that would provide comprehensive relief for people struggling to pay their debt right now and those who have fallen behind."
Although the current bankruptcy code states that student loans are dischargeable, the discharge can only be obtained if there is extreme hardship. The courts have defined extreme hardship in the most extreme manner available and to qualify you must practically be comatose, intubated and on life support.
This bill is a call for all of us to write our congressional representatives and tell them that we want them to support this bill. Student loan debt is one of the biggest issues that I see in bankruptcy. Graduates today cannot buy homes, start businesses or take public service jobs because they are carrying a student loan payment the size of a mortgage payment. Yes, there are income contingent payment plans that offer loan forgiveness but that's after 20-25 years. We need relief now and college tuition just keeps rising - not lowering.
I wholeheartedly support this bill and urge everyone reading this to contact their representative and tell Congress and this administration that action is needed now. Bring back the meaningful option of making student loans dischargeable in bankruptcy, or at least define what "undue hardship" is in specific and less stringent terms than what we currently have.
