student loans

It’s a ‘severe problem’ that student-loan borrowers are still facing roadblocks getting rid of their debt through bankruptcy, Elizabeth Warren says

Sen. Elizabeth Warren.Tom Williams/CQ-Roll Call, Inc via Getty Images

  • Elizabeth Warren called on the Justice Department to restore bankruptcy protections for student-loan borrowers.

  • Borrowers currently have to prove a difficult standard in court to get rid of their debt.

  • Biden’s administration has promised reform, but the process continues to be slow-moving.

Massachusetts Sen. Elizabeth Warren is renewing the call to restore bankruptcy protections for student-loan borrowers.

Last week, President Joe Biden took a major step in providing relief to millions of borrowers by announcing up to $20,000 in student-loan forgiveness for those making under $125,000 a year. While that relief is expected to wipe out balances for 20 million borrowers, the majority will still have debt balances that some might seek to discharge in court through bankruptcy. But doing so has historically been very difficult, and Warren wants Attorney General Merrick Garland to ensure bankruptcy becomes a viable route to providing relief.

“To support the administration’s efforts to overhaul the student loan system and ensure that bankruptcy relief is a viable option for borrowers in severe financial straits, it is critical that you issue and implement this updated guidance without delay,” Warren wrote in a Thursday letter

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Warren Grills DOJ on Why It’s Still Trying to Crush Student Debtors in Bankruptcy Court

Just over a week after President Joe Biden unveiled a plan to cancel $10,000 in federal student loan debt for most borrowers and reform the income-driven repayment program, his administration on Thursday was rebuked once again for its ongoing effort to deny bankruptcy relief to some of the nation’s most hard-pressed student debtors.

“Those who continue to struggle with student debt are in need of updated undue hardship guidance.”

In a letter sent to Attorney General Merrick Garland, Sen. Elizabeth Warren (D-Mass.) asked about the status of the Department of Justice’s “work to update guidance on how it handles undue hardship claims by student borrowers in bankruptcy proceedings.”

“To support the administration’s efforts to overhaul the student loan system and ensure that bankruptcy relief is a viable option for borrowers in severe financial straits,” Warren wrote, “it is critical that you issue and implement this updated guidance without delay.”

Although Biden spent years as a senator siding with lenders and making it more difficult for Americans to reduce educational loan repayment obligations in court, he promised last year to “allow for student debt to be relieved in bankruptcy,” which would help give overwhelmed borrowers a fresh financial start.

Nevertheless,

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