10.28.24

Durbin Joins Warren, Whitehouse, Warnock To Push DOJ, ED For Expanded Outreach On Discharging Student Loan Debt In Bankruptcy

WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, today joined U.S. Senators Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Raphael Warnock (D-GA) in sending a letter to the Department of Justice (DOJ) and Department of Education (ED) commending the agencies on their progress in helping borrowers who are struggling financially to discharge their student loans in bankruptcy and asking them to continue expanding awareness of the Biden-Harris administration’s new policy.

In November 2022, at the urging of Durbin, Warren, and others, DOJ and ED issued guidance to DOJ attorneys that sought to streamline the process of discharging student loans in bankruptcy.  Prior to this change, borrowers had to undergo a confusing, invasive, and time-consuming process in bankruptcy court to prove repayment would constitute an “undue hardship.”

Ninety-nine percent of borrowers who filed bankruptcy from 2011 to 2019 did not have their student loans discharged—borrowers came to believe that there was no way out of the crushing weight of student loans, even through bankruptcy.

“The ‘undue hardship’ standard historically set an unnecessarily high bar that essentially required borrowers to demonstrate a certainty of hopelessness to obtain relief,” wrote the Senators.

Since DOJ and ED’s new process was announced, more and more borrowers have received relief.  New data obtained by Warren’s and Durbin’s offices show that, under the Biden administration’s new guidance, 85 percent of borrowers who sought relief received recommendations for either full or partial debt discharge.

The high rates of total or partial discharge for those who have applied through the new guidance suggest that many other borrowers could also qualify if they applied.  The Senators are pushing to expand awareness for a more transparent, fair, and accessible process.

“We thank you for your agencies’ ongoing commitment to helping borrowers struggling with student debt and urge continued outreach to expand awareness of the streamlined process for qualified borrowers,” concluded the Senators.

A copy of the letter is available here.

Durbin has long been an advocate for widespread student debt relief.  In August 2021, Durbin introduced the bipartisan FRESH START Through Bankruptcy Act, which would restore the ability for struggling borrowers to seek a bankruptcy discharge for federal student loans after a waiting period of ten years. Unlike most other types of debt, student loans are not dischargeable in bankruptcy except in rare circumstances.

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