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Bipartisan panel at House hearing presses overhaul of student loan discharge rules
Summary
Witnesses, judges and members told the subcommittee that the current undue-hardship standard effectively bars student loan discharges for almost all filers and urged Congress to revise the statute to permit meaningful bankruptcy relief for student borrowers; some proposed removing 'undue' from the test to reset judicial standards.
Ranking Member Jerrold Nadler and other Democrats used the House Judiciary subcommittee hearing to press for changes to the bankruptcy code’s treatment of student loans, arguing the existing ‘‘undue hardship’’ standard makes discharge near-impossible for most borrowers.
Witnesses, including Professor Melissa Jacoby of the University of North Carolina School of Law, said the statutory and judicial developments since the 1970s have left student loans treated very differently from other unsecured debts and that the Brunner undue-hardship test in many circuits places an almost insurmountable burden on debtors.…
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