Sen. Elizabeth Warren [D-Mass.] is pushing the Department of Justice to implement new guidance related to how student loan debts are handled when individuals file for bankruptcy protection, saying the department needs “to do its part to ensure that borrowers who continue to struggle with student debt have a path toward additional relief.”
Backstory: Student loan debt can only be discharged through bankruptcy when the borrower can prove he or she is suffering from an “undue hardship.” To Sen. Warren and other Democrats, that hurdle is too high and they want the federal government to make it easier for individuals to be able to have their student loan debts discharged during bankruptcy.
Sen. Warren was among a group of Senate Democrats who sent a letter back in March requesting an update on progress that the Department of Justice and the Department of Education were making on this guidance. Sen. Warren isn’t happy she hasn’t heard anything since.
- Ratcheting up the rhetoric, Sen. Warren said she is now “demanding” that the Justice Department “prioritize” the guidance and “provide clear answers” about its plans by Sept. 15.
Why This Matters: While the recent announcement that individuals will be able to have up to $20,000 of their existing student loan debt canceled, that will still leave a lot of people with student loan debt that has to be repaid. Making it easier to have that debt discharged via bankruptcy may be seen as a substitution from those who wanted the federal government to cancel more student loan debt than it announced.
