Update on Legislation to Allow Discharge of Private Student Loans

[KeithDoxen]

This coming week will be the last week that the 111th Congress will be in session. Once Congress adjourns, the next time our lawmakers gather together in Washington, it will be to form a new Congress, meaning that all legislation that failed to pass the current Congress will cease to exist. That would include HR 5043, the bill that would allow debtors to once again discharge private student loans in bankruptcy.

If Congress doesn't pass HR 5043 this week, the bill will be dead. That's because the new Congress in January would have to craft a whole new bill if it chooses to take up the issue again next year. Since the 112th Congress will be led by Speaker-designate John Boehner, an ally of the student loan industry, this is unlikely to happen. It's now or never for this bill.

HR 5043, if passed, would allow student loans that have no federal funding or backing to be discharged via bankruptcy just like any other debt. Please take this final opportunity to write or call your congresspersons and senators and tell them to pass this bill before they go home for the holidays.

[chicagoannie]

I have no student loans, thank goodness (or not - for me it means college was more than a few years ago!) but I thought no student loans were able to be discharged. I know that current law reads unless payment causes undue hardship but I thought NO ONE ever successfully got their student loans forgiven. Are there people who were able to BK on their loans?

[KeithDoxen]

No, that's the whole point of this bill. It allows some student loans to be discharged --- those that essentially have no connection with the federal government. This bill would actually return the law to the way it was just a few years back, when private student loans could be discharged in bankruptcy just like any other debt. A few years ago, the student loan companies successfully lobbied Congress to make their loans non-dischargeable just like federal loans. But unlike federal loans, private lenders offer debtors NO consumer protections, such as income-based repayment or forgiveness for public service work. The bill that Congress is currently considering would bring back debtors' rights in the area of private student loans.

[despritfreya]

Did you really think a bill aimed at helping the consumer over the credit industry would pass? Come on. . .

[clinic22]

Any updates on whether this bill passed or not?

[KeithDoxen]

Any updates on whether this bill passed or not?

It's still hovering around in committee. Congress has yet to adjourn for the year, so there's still a faint glimmer of hope. But with Christmas around the corner, and with the big votes on taxes, the budget, and DADT pretty much done, my guess is that Congress will go home without passing this bill. Never say never, but it doesn't look good.

[clinic22]

Congress has adjourned. Anyone hear anything yet? I haven't been able to find any info

[KeithDoxen]

It's over. The bill is dead.

[blackdog]

It's over. The bill is dead.

I'm so angry about this. Thanks for the update, however.

[despritfreya]

It's over. The bill is dead.

See my above post. . . told ya

Des.

[Ontovicks]

It seems to me that there is a lot of pressure building up to do something about student loans debt. It is a huge burden on many young people and many are arguing that it should be dischargeable in bankruptcy.

[Ontovicks]

Student loans should be dischargeable

Take a look at the article "Stop J.D. Inc., Make Law School Debt Dischargeable in Bankruptcy" Posted by John O'Connor under Student Loans in nationalbankruptcyforum.com

[HHM]

It seems to me that there is a lot of pressure building up to do something about student loans debt. It is a huge burden on many young people and many are arguing that it should be dischargeable in bankruptcy.

We can hope, but the bill is basically dead right now.

[gml120]

Any new news lately? I haven't been able to find anything recent.

[TeacherMomma]

It's back I know it is such a long shot, but the answer to so many people's prayers if it ever happened.

http://www.govtrack.us/congress/bill.xpd?bill=h112-2028