Scanlon Introduces COVID-19 Student Loan Relief Act

Bill Would Allow Americans Filing for Bankruptcy due to COVID-19 to Discharge Student Loans

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Washington, July 16, 2020 | comments

Today, Representative Mary Gay Scanlon (PA-5) introduced the COVID-19 Student Loan Relief Act of 2020 (CSLRA), a bill that would expand current bankruptcy laws to allow Americans filing for bankruptcy due to the global pandemic to discharge their student loans.

“A college degree should not be a debt sentence, and time and time again student borrowers have been left twisting in the wind,” said Rep. Scanlon. “Under current bankruptcy guidelines, student borrowers are prevented from discharging their student loan debt, unlike almost every other kind of debt, prioritizing protection for banks and student loan servicers. That must change. As we navigate the challenges presented by the global health and economic crisis, Americans filing for bankruptcy due to COVID-19 must be able to discharge student loan debt, too.”

Over 45 million people shoulder $1.6 trillion dollars in student loan debt and according to the last jobs report, 34 million Americans have filed for unemployment. The CSLRA would amend Chapter 11 of the U.S. Bankruptcy Code to allow federal and private student loans to be dischargeable for any American whose income has been reduced during, or as a result of, the COVID-19 pandemic, or who has had a primary income earner in their family member die, or become permanently disabled, as a result of COVID-19.

This bill, cosponsored by Representatives Jerry Nadler (D-NY), David Cicilline (D-RI), Alma Adams (D-NC), Chuy Garcia (D-IL), and Juan Vargas (D-CA), has been endorsed by the National Consumer Bankruptcy Rights Center.

“This bill will relieve an enormous burden on families that are struggling with unprecedented hardships caused by the pandemic, “ said Henry Sommer, President of the National Consumer Bankruptcy Rights Center. “Without relief from student loans, bankruptcy can only be a very partial remedy for the economic dislocations millions are suffering”

A copy of the CSLRA can be found here: https://scanlon.house.gov/UploadedFiles/CSLRA_Bill.pdf

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