[Congressional Record Volume 163, Number 91 (Thursday, May 25, 2017)]
[Senate]
[Pages S3217-S3218]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Whitehouse, Mr. Franken, Mr. 
        Blumenthal, Ms. Hirono, Ms. Warren, Mr. Reed, Mr. Wyden, Ms. 
        Baldwin, Ms. Hassan, Mr. Kaine, and Mr. Murphy):
  S. 1262. A bill to amend title 11, United States Code, with respect 
to certain exceptions to discharge in bankruptcy; to the Committee on 
the Judiciary.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1262

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fairness for Struggling 
     Students Act of 2017''.

     SEC. 2. EXCEPTIONS TO DISCHARGE.

       Section 523(a)(8) of title 11, United States Code, is 
     amended by striking ``dependents, for'' and all that follows 
     through the end of subparagraph (B) and inserting 
     ``dependents, for an educational benefit overpayment or loan 
     made, insured, or guaranteed by a governmental unit or made 
     under any program funded in whole or in part by a 
     governmental unit or an obligation to repay funds received 
     from a governmental unit as an educational benefit, 
     scholarship, or stipend;''.

  Mr. DURBIN. Today I am reintroducing the Fairness for Struggling 
Students Act. This bill takes an important step toward addressing the 
student debt crisis in America. It would once again treat private 
student loans like nearly all other forms of private unsecured debt and 
permit these loans to be discharged in bankruptcy.
  Student loan debt has reached an astronomical $1.4 trillion--more 
than double what it was in 2008. Student loan debt is now the second 
largest form of consumer debt in America, after only mortgage debt. The 
balance of student loan debt is larger than credit card and auto loan 
debt. Currently, around 44 million borrowers hold student loan debt, 
with an average balance of roughly $30,000.
  This past weekend, the New York Times published an editorial that 
clearly and concisely describes the student debt crisis that we face. 
The editorial is titled ``Student Debt's Grip on the Economy,'' and I 
ask consent to place it into the Record. As the editorial points out, 
``student debt has become a drag on graduates' hopes and a threat to 
economic growth.''
  This editorial reports that as college costs have continued to 
increase, wages have not kept pace. Students continue to take out 
larger amounts in loans to afford the rising costs of college. This 
crushing student loan debt has forced young people to delay making 
important life decisions like getting married and economic investments 
such as home ownership. We are also seeing an increase in the wealth 
gap between college graduates with student debt and those without 
student debt. The burdens of student debt are threatening the notion 
that being college-educated is enough to get ahead. As the editorial 
notes, ``the fallout from these burdens, afflicting those who are 
supposedly best prepared to face and shape the future, is not only a 
personal financial issue but also a social and economic one.''
  These burdens are even more significant for students who have taken 
out private student loans. Federal student loans have fixed, affordable 
interest rates, and a variety of consumer protections including 
forbearance in times of economic hardship and manageable repayment 
options. Private loans, on the other hand, frequently have high, 
variable interest rates, and they lack the repayment options and 
protections that federal loans offer. In 2013, the Consumer Financial 
Protection Bureau reported that the outstanding private student loan 
debt in America was $165 billion, at least $8 billion of which was then 
in default. As it turns out, many students were steered into costly 
private student loans by for-profit colleges, often when the students 
still had eligibility for lower-cost federal loans.
  One of those students is a woman named Marta, from Chicago, who wrote 
to me about her story and asked me to only use her first name. Marta 
came to the United States from Poland in 1994 with her family, hoping 
for a better life. She is a U.S. citizen now, and has a family of her 
own. As an aspiring designer, Marta wanted to enroll in a college that 
would help launch her career. So after meeting a recruiter at a college 
fair from the now-closing, for-profit Harrington College of Art and 
Design, she enrolled in the fall of 2004. At the urging of the 
recruiter, she signed the enrollment paperwork and began courses. Being 
the first in her family to attend college, she did not know the 
difference between private and federal student loans. The recruiter 
assured her that the paperwork was just part of the normal college 
enrollment process.
  It was only after she graduated that Marta learned that in signing 
the paperwork the recruiter gave her, she had taken out a combination 
of federal student loans and much riskier and more expensive private 
student loans. She now has over $120,000 in student debt, the majority 
of which is in private student loans. The monthly payments are 
overwhelming and Marta worries about what this crushing debt means for 
her family's future. Thanks to high-interest rates, her private loans 
continue to grow despite doing her best to make her payments.
  Marta enrolled in college to get a good career and widen her future 
opportunities. But she has been left with enormous debt from a failed 
for-profit college. And now she is struggling and needs a fair chance 
to get back on her feet. There are stories like Marta's in every corner 
of America. And it's time to do something about it.
  Today I am reintroducing the Fairness for Struggling Students Act. 
This bill would restore the bankruptcy code's pre-2005 treatment of 
private student loans.
  Since 2005, private student loans have enjoyed a privileged status 
under the bankruptcy code: they cannot be discharged in bankruptcy 
except in extremely limited circumstances. Only a few other types of 
private unsecured debt cannot be discharged in bankruptcy--criminal 
fines, child support, back taxes and alimony. In contrast, nearly all 
types of private unsecured debt, including credit card and medical 
debt, are dischargeable in bankruptcy.
  Congress had no good reason to make private student loans non-
dischargeable in 2005. It was a provision that was quietly slipped into 
a broader bankruptcy reform bill with little debate and no 
justification. There was no evidence that private student loan 
borrowers had abused the bankruptcy system to avoid repayment before 
2005. But, since the law changed in 2005, lenders have been 
incentivized to extend expensive private student loans to students that 
the students cannot repay and that they can never escape. This is 
overwhelming for students and an impairment on our overall economy.
  The Fairness for Struggling Students Act will make important relief 
available to students being crushed by private student loan debt, and 
will discourage private lenders from extending risky loans.

[[Page S3218]]

  This bill is supported by a large coalition of educational, student, 
civil rights and consumer organizations including the American 
Association of Community Colleges, American Association of State 
Colleges and Universities, American Association of University Women, 
American Council on Education, American Federation of Teachers, 
Association of Public and Land-grant Universities, Center for 
Responsible Lending, Consumer Action, Consumer Federation of America, 
Consumers Union, Demos, Empire Justice Center, NAACP, National 
Association of Consumer Bankruptcy Attorneys, National Consumer Law 
Center (on behalf of its low income clients), National Association of 
College Admission Counseling, National Association of Consumer 
Advocates, National Association of Student Financial Aid 
Administrators, National Consumers League, Public Citizen, The 
Institute for College Access and Success, UNCF, and Young Invincibles.
  I want to thank the cosponsors of this bill, Senators Whitehouse, 
Franken, Blumenthal, Hirono, Warren, Reed, Wyden, Baldwin, Hassan, 
Kaine, and Murphy for their support, and I hope more of my colleagues 
will join us.
  This is just one step of what we need to do to get control of the 
student debt crisis in our country. But it is a critical step, and it 
is long overdue. Let's give struggling students a fair chance,
                                 ______