Durbin Delivers Opening Statement At Senate Judiciary Committee Hearing On Student Loan Bankruptcy

Announces first bipartisan bill in the Senate to restore dischargeability of federal student loans in bankruptcy

WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, today delivered an opening statement at the Senate Judiciary Committee hearing entitled “Student Loan Bankruptcy Reform.” Currently 45 million Americans hold more than $1.7 trillion in student loan debt.  Unlike most other types of debt, student loans are not dischargeable in bankruptcy except in extremely rare circumstances. During his opening statement, Durbin shared stories from struggling student borrowers and argued for the need to allow these borrowers the ability to discharge their loans in bankruptcy as a last resort.

Key quotes from the opening statement are below:

“Forty-five million Americans carry student loan debt—and they’re not just young people. Eight million are over the age of 50—and some are now just learning that their Social Security checks are being garnished to pay their debt. These loans are with you for life.”

“Linda Navarro, a veteran of the U.S. Navy, went back to school when she was 39.  She’s now 70 and has $145,000 in student loans. She’s carried this debt for 31 years.  She wrote, , ‘there’s no way to look forward,’.”

“Ronishia Bradley, a single mom with three kids. She’s a hotel desk clerk. She has $51,000 in student debt. She’s trying to get it discharged in bankruptcy and the Department of Education is fighting her all the way, saying she spent too much money on buying food for her children.”

“This is new to America. It didn’t used to be this way.  Before 1976, student loans were treated like other types of unsecured debt in bankruptcy.  If you were facing financial ruin, you could get relief.”

“Proving undue hardship is nearly impossible.  Starting with a 1987 case called Brunner, courts have interpreted the phrase to set an impossibly high bar for relief. To pass the Brunner test of undue hardship, you have to convince a bankruptcy judge that it’s hopeless that you’d ever repay, while the Department of Education or its guaranty agencies are on the other side arguing against you.”

“In 2017, the Wall Street Journal looked around for undue hardship cases. They found four. Four cases in the nation when a bankruptcy judge discharged student debt for undue hardship.”

“Undue hardship should not be the only path to address student loans in bankruptcy.  There should be another option.  We should go back to how it was before 1998, when borrowers could also seek relief after a significant waiting period.  That system worked.”

“That’s why today, I’m introducing a bill with Senator Cornyn: the FRESH START Through Bankruptcy Act…Our bill would restore the ability of student loan borrowers to discharge federal student loans, after a waiting period of ten years. And it would pair this reform with an accountability measure for schools that have consistently high default rates.”

“This is a big moment.  I’ve been introducing student loan bankruptcy [bills] for a long time.  This is the first time it’s been bipartisan.  With this bill, we see a growing bipartisan consensus that the status quo isn’t working, and that we need student loan bankruptcy reform.”

Video of Durbin’s opening statement is available here.

Audio of Durbin’s opening statement is available here.

Footage of Durbin’s opening statement is available here for TV Stations.