A New Bipartisian Bill is Introduced in Congress to Allow the Discharge of Student Loans in Bankruptcy After 10 Years

The FRESH START Through Bankruptcy Act of 2021Durbin/Cornyn FRESH START would:-Make Federal Student Loans Eligible for Discharge in a Bankruptcy Proceeding ten years after thefirst loan payment is due.- As part of the bankruptcy proceedings, certain colleges and universities  who receive a certain amount of federally backed student loans, would be required to repay a portion of discharged federal student loans to the taxpayer, in a new cost-sharing structure.- Retain the Existing Undue Hardship Option for private student loans and for federal student loans thathave been due for less than ten years.- Increase Institutional Accountability by creating provisions that require colleges with more than one third of their students receiving federal student loans to partially refund the government if a student’s loan is later discharged in bankruptcy. This provision would apply if a school had consistently high student loan default and low repayment rates at the time of a student’s attendance.-Provide an Option for Student Borrowers who have no realistic path to pay back their overwhelmingstudent loan debt by allowing bankruptcy to be an option to help them get back on their feet.More Information about the Bill can be found at:https://www.judiciary.senate.gov/imo/media/doc/FRESH%20Start%20Act%20of%202021%20One%20Pager.pdf