Doing the nearly impossible-discharging student loan debt in bankruptcy-seems to be remotely possible, thanks to Sen. Tom Harkin of Iowa, whose bill would allow a “small portion” of student loan debt to be discharged. As Josh Mitchell reports for the Wall Street Journal, Harkin’s legislation would allow some private loans to be discharged, but not federal government-backed loans.
But, of course, as Mitchell writes: “The bill isn’t likely to pass this year, given the midterm elections and broad partisan disputes over higher-education policy. But it sets a stake in the ground for Democrats in talks on a final bill.”
Perhaps a stake is all we need. Lawmakers need to start somewhere, and even if this bill or subsequent bills fail to pass, the fact that Harkin is working on this kind of legislation signals the possibility-however remote at the moment-of giving relief to some student loan borrowers who are in over their heads in debt.
Discharging student loan debt in bankruptcy is nothing new. In fact, prior to recent tightened restrictions on who is eligible for bankruptcy relief, debtors could discharge their student loan debt, along with their other debts.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 put an end to that, requiring a showing of “undue hardship” on the part of debtors before student loans can be discharged.