Congressman John K. Delaney has filed legislation to make student loan debt dischargeable in bankruptcy.
Here’s what David Rossman of the Missourian had to say about the bill:
Today, student loans are nearly impossible to discharge in a bankruptcy proceeding. HR 449 would effectively restore bankruptcy rights to student loan borrowers.
Delaney has been quoted as saying, “Student loan debt is dragging down economic growth, keeping the American Dream out of reach for many and is a monthly strain for millions.
“While student loan debt is a complex problem that will require many solutions — increased support for grant programs, efforts to increase affordability, improved consumer education — we also need to reform our laws to help those with the absolute greatest need.
“Right now, there is effectively a huge student loan loophole in bankruptcy law that’s hurting real people.”
Filing for bankruptcy is not an easy thing and does not improve one’s credit standings. The argument that students will seek the most expensive education available and file bankruptcy immediately after graduating is a red herring.
Delaney stressed this point. “Bankruptcy has long been an option of last resort for individuals facing an irresolvable level of debt.”
He continued: “It doesn’t make sense for students with heavy debt burdens to be worse than someone with credit card, auto loan debt or mortgage debt.”
It is time to pay attention to those who find themselves between the proverbial rock and hard place. HR 449 will actually stimulate the economy by putting a portion of $1 trillion back into the pockets of those who find themselves on the wrong side of the economic bubble.
As quoted in a 2012 article in Time, William E. Brewer, president of the National Association of Consumer Bankruptcy Attorneys said that student loans “can be a debt that’s kind of like a ball and chain that you can drag to the grave. You can unhook it when they lay you in the coffin.”
The relief from this debt would be the final touch in an economic stimulus that would actually help the lower- and middle-income Americans. Just having the relief available would ease the burden from those saddled with student loan debt.
It is unfortunate that Republicans especially have no appetite to help middle- and lower-incomes constituent. As President Obama suggested in the State of the Union address, members of Congress need to live a month at the minimum wage. Let them walk in the shoes of those they represent, not just the rich donors.
HR 449 needs to pass and pass quickly.