Durbin Questions Witnesses At Senate Judiciary Committee Hearing On Student Loan Bankruptcy Reform
WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, today questioned witnesses 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. Durbin asked Christopher Chapman, President and CEO of AccessLex Institute, and Elizabeth Gonzalez, Directing Attorney of the Consumer Law Unit at the Public Law Center, about the undue hardship provision for student loans in the Bankruptcy Code and the challenges borrowers face in seeking relief because of it.
“Whatever the definition is under the Brunner test, it practically is no relief,” Durbin said. “I have tried, with no success, to appeal to the Department of Education, which is the bill collector, to establish some sort of reasonable standard…I believe they are contracting out some of these financial services and there may be some perverse financial incentive to always say no.”
The witnesses acknowledged that the definition of undue hardship is one the overwhelming majority of federal student loan borrowers have nearly an impossible time trying to prove in bankruptcy court. Durbin then asked Illinois Attorney General Kwame Raoul about the experiences he has faced trying to hold for-profit colleges and universities in Illinois accountable for their predatory loan practices that have buried federal student loan borrowers deep in debt.
“These schools are notorious…students get into the system, they borrow too much darn money, they either then drop out or get a worthless degree and can’t pay it back. It just keeps building with interest. You’ve tried to appeal under some of these classes of students –with some success…but there are many of them that don’t get that kind of relief or protection from the deception they’ve been witnessing,” Durbin said.
AG Raoul said there is a bipartisan consensus among state attorneys general to hold these bad actors in the for-profit college industry accountable, but it is still very hard to help students get the relief they are owed.
Durbin ended his questioning by advocating for the bill he introduced today with Senator John Cornyn (R-TX), which would provide federal student loan borrowers the opportunity to discharge their loans in bankruptcy after a waiting period of 10 years.
“I hope we are moving toward a consensus and certainly, Senator Cornyn and I invite others to join us in this conversation. We have talked about this student debt for how long? Decades. And we haven’t done a darn thing about it for a long time. We can do something now that is reasonable and meaningful. I think restoring the 10 year [waiting period] is a reasonable step in that direction, as well as the accountability for the schools that are abusing student loans,” Durbin concluded.
Video of Durbin’s questions in committee are available here.
Audio of Durbin’s questions in committee are available here.
Footage of Durbin’s questions in committee are available here for TV Stations.
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