It seems that many power players in Washington, D.C., have heard the calls of millions of Americans who are drowning in student loan debt. As the average cost of a college education has skyrocketed over the past few decades, graduates find it increasingly difficult to pay for basic expenses like rent, let alone think about saving for a home or children.
The Biden administration and several members of Congress have talked about options for student loan cancellation or at least “forgiveness” of as much as $50,000 for some borrowers. The pause on student loan payments is due to end next month. That means at least some reduction in student loan obligations is likely to become more urgent this year.
What is the proposed law?
Currently, most student loan debt is not eligible to be discharged if someone files for bankruptcy. Now a bipartisan piece of legislation could change that. Last year, Sen. Dick Durbin and Sen. John Cornyn, introduced The FRESH START Through Bankruptcy Act of 2021. Of course, it could take months or longer for this to get through Congress and, if it does, end up on President Biden’s desk.
The legislation allows people to discharge federal student loan debt in bankruptcy if they’ve had the loan for at least 10 years. The current hardship option would remain. It doesn’t require that waiting period. However, qualifying for it isn’t easy.
Even if you can’t discharge any of your student loan debt now, it may still be worthwhile to consider bankruptcy if that debt has left you mired in other dischargeable debt. If you need a “fresh start,” bankruptcy may still be the best solution. With experienced legal guidance, you can make the best choice for yourself and your family.