[Student Borrower Bankruptcy Relief Act of 2019]
Rep. Nadler: “Nearly 45 million Americans owe nearly $1.5 trillion of student loan debt, an amount that exceeds all outstanding credit card and auto loan debt combined. That amount has tripled since 2006. It will grow to $2 trillion just two years from now.”
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Tuesday, House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening remarks, as prepared, during the markup of H.R. 2648, the Student Borrower Bankruptcy Relief Act of 2019:
“H.R. 2648, the ‘Student Borrower Bankruptcy Relief Act of 2019,’ addresses head-on the manifest unfairness that student loans—unlike every other unsecured debt, such as credit cards or auto loans—are effectively nondischargeable in bankruptcy.
“We are in the midst of a growing crisis. Nearly 45 million Americans owe nearly $1.5 trillion of student loan debt, an amount that exceeds all outstanding credit card and auto loan debt combined. That amount has tripled since 2006. It will grow to $2 trillion just two years from now.
“Some people may like to think of student loan debt as a problem for the young, but that falsehood is belied by the data and by the experience of millions of adults and retirees still struggling to manage the student loans they took out decades ago.
“Today, there are 15.5 million people with student loan debt age 40 or older, including 8.4 million people age 50 or older and 3.2 million people over the age of 60. According to the Federal Reserve, today people age 50 or older have more than $262 billion student loan debt. According to the Consumer Financial Protection Bureau, more than 40% of borrowers aged 65 or older are in default on their student debt. The reality for an increasing number of senior citizens is that they will bear these debts for the rest of their lives.
“This crisis affects us all, but it affects Black, Latino, and Native Americans more than others. Study after study has shown that minority borrowers take on more student loan debt, take longer to pay that debt off, and are more likely to fall behind or into default than white borrowers. In part, this is because they are more likely to take out predatory, high-interest private loans to attend for-profit universities. One study found that these loans are so exploitative that they wipe out the long-term benefits of the education they pay for.
“The reality is that Americans across the nation are facing crushing student loan debt that is preventing them from increasing their incomes, purchasing homes, buying cars, getting married, and otherwise living the American dream. We must ensure that Americans are able to invest in their education and then go on to live productive lives without the growing burden of student debt pulling them down.
“The bankruptcy process is made for just this kind of crisis. It is an option of last resort, and the consequences of filing for bankruptcy are severe. But it also promises a fresh start so that people can get back up and keep working and providing for their families. That promise rings hollow for many people, however, because student loans—the single largest type of consumer debt—are effectively immune from the bankruptcy process.
“Under current law, educational debt can only be discharged in bankruptcy if the borrower demonstrates that continued repayment of the debt would impose an ‘undue hardship’ on the debtor and the debtor’s dependents. In practice, this standard has proven a nearly impossible hurdle to overcome in the courts. There is no reason that this one category of debt should be singled out for special treatment that makes relief under the bankruptcy code virtually impossible. This legislation, therefore, would repeal the current limitation on educational debt and would place it on the same footing as other similar debt.
“The ‘Student Borrower Bankruptcy Relief Act of 2019’ would fix a great injustice that burdens millions of Americans and would strengthen our economy in the process. I thank all of my colleagues who have worked with me to fight for this legislation, including Congressman Neguse, who is a lead co-sponsor of the bill, and Congressman Cohen, who has been a champion of similar legislation to protect student debtors in bankruptcy. I urge all Members to support H.R. 2648.”
