Rep. John Delaney, D-Md., introduced bipartisan legislation Friday to allow student debt to be discharged in bankruptcy.
The Discharge Student Loans in Bankruptcy Act (H.R. 2366) reforms federal bankruptcy rules to establish parity between student loan debt and other forms of debt. Rep. John Katko, R-New York, is the lead republican co-sponsor of the bill.
As it stands now, student loan debt cannot be discharged.
“Student loan debt is dragging down economic growth and keeping the American Dream out of reach for many,” said Delaney in a statement. “While student loan debt is a complex problem that will require many solutions — increased support for grant programs, efforts to increase affordability, improved consumer education and transparency — we also need to reform our bankruptcy laws to help those with the absolute greatest need.”
The “huge student loan loophole” in bankruptcy law, he continued, is “hurting real people.”