Rep. John Delaney, D-Md., introduced bipartisan legislationFriday to allow student debt to be discharged inbankruptcy.
|The Discharge Student Loans in Bankruptcy Act (H.R.2366) reforms federal bankruptcy rules to establish paritybetween student loan debt and other forms of debt. Rep. John Katko,R-New York, is the lead republican co-sponsor of the bill.
|As it stands now, student loan debt cannot bedischarged.
|“Student loan debt is dragging down economic growth and keepingthe American Dream out of reach for many,” said Delaney in astatement. “While student loan debt is a complex problem that willrequire many solutions — increased support for grant programs,efforts to increase affordability, improved consumer education andtransparency — we also need to reform our bankruptcy laws tohelp those with the absolute greatest need.”
|The “huge student loan loophole” in bankruptcy law, hecontinued, is “hurting real people.”
|Total student loan debt in the United States in 2016 reached arecord level of $1.3 trillion dollars, Delaney said in citing datafrom the Federal Reserve Bank of New York, “the18th consecutive year with a cumulativeincrease.”
|Every member of Congress from every state “has constituents whoare struggling severely because of student loan debt,” he added.“At the very least we should have some basic fairness in thelaw.”
|Katko added that “addressing the high cost of college and thecrushing burden of student loan debt requires innovative andthoughtful changes in policy.”
|While discharging debt in bankruptcy “is a last option for many,it should not be the case that student loan debt is the only formof debt that cannot be discharged.”
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2023. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
