[Congressional Record Volume 165, Number 19 (Wednesday, January 30, 2019)]
[Extensions of Remarks]
[Pages E110-E111]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      INTRODUCTION OF PRIVATE STUDENT LOAN BANKRUPTCY FAIRNESS ACT

                                 ______
                                 

                            HON. STEVE COHEN

                              of tennessee

                    in the house of representatives

                      Wednesday, January 30, 2019

  Mr. COHEN. Madam Speaker, I rise today in support of the Private 
Student Loan Bankruptcy Fairness Act, a bill I introduced earlier today 
with my colleagues Danny Davis and Eric Swalwell. This bill would 
provide critical relief to Americans in severe financial distress who 
are struggling with overwhelming private student loan debt.
  Before 2005, private student loans issued by for-profit lenders were 
treated in bankruptcy like most other unsecured consumer debt,

[[Page E111]]

such as credit card debt. Our bill will ensure that privately issued 
student loans will once again be treated like other consumer debt and 
be dischargeable in bankruptcy.
  Private student loans have much in common with credit cards and 
subprime mortgages. For example, private student loans often have 
onerous interest rates with no caps and can include exorbitant fees and 
hidden charges. In addition, many lenders have used aggressive 
marketing and high-pressure sales tactics to target particularly 
vulnerable people, namely, young men and women without financial 
experience, and older Americans seeking to re-start their careers by 
pursuing higher education and training.
  To make matters worse, private student loans lack the critical 
consumer protections that come with federal student loans. For 
instance, private lenders are not required to--and typically do not--
provide any of the deferments, income-based repayment plans, 
cancellation rights, or loan forgiveness programs that are available to 
federal student loan borrowers.
  A hallmark of our nation's bankruptcy law is to give an honest but 
unfortunate debtor a chance to obtain meaningful relief. To that end, 
the law exempts very few types of debt from elimination through the 
bankruptcy process, and only for principled policy reasons, such as 
debts for child support, taxes, criminal fines and intentional injury.
  In 2005, however, Congress changed the bankruptcy law without any 
substantive analysis so that student loans made by private, for-profit 
lenders became very difficult to discharge in bankruptcy.
  Currently, the Bankruptcy Code prohibits the discharge of private 
educational debt unless the debtor, in addition to meeting the already 
stringent requirements for personal bankruptcy, proves that repayment 
would impose an, ``undue hardship,'' on the debtor and the debtor's 
dependents. In practice, however, it's hard for a debtor to ever 
successfully meet this standard.
  The current bankruptcy law unjustly punishes hardworking Americans 
who are simply trying to improve their lives by pursuing a higher 
education and became victims of predatory private student loan lenders.
  We can do better.
  I urge my colleagues to support the Private Student Loan Bankruptcy 
Fairness Act and restore the fair treatment of private student loan 
borrowers in bankruptcy.

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