Student debt is a source of major financial burden for younger generations of Americans. Total student debt stands at $1.4 trillion divided among more than 44 million borrowers as of 2017, and total liabilities are expected to keep rising. Nearly 11 percent of accounts are in default or 90 days delinquent, meaning a significant amount of borrowers are having trouble with their payments. It’s nearly impossible for individuals in Kentucky and around the country to discharge their student loan debt in bankruptcy.

At least one Democratic congressman believes this situation this change. Peter DeFazio from Oregon introduced The HIGHER ED Act, H.R. 5549 in April 2018. The proposed bill would provide relief to some borrowers by making changes to the student loan bankruptcy rules. Specifically, more borrowers would qualify for undue hardship, a standard that determines if borrowers are eligible for discharging their student loan debt. To date, judges decide who qualifies for undue hardship on a case-by-case basis.

Early in 2018, the Department of Education requested feedback from the public regarding the undue hardship decisions made in bankruptcy courts throughout the country. Department staff believes that strict standards could be preventing many individuals from seeking bankruptcy. A study from the University of Pennsylvania Law School confirms this concern. It shows that only 0.1 percent of people who filed for bankruptcy included their student loan debt for discharge.

Meeting the standards for Chapter 7 Bankruptcy can seem challenging, but it’s the responsibility of bankruptcy attorneys to help their clients meet the requirements and navigate the legal process. Many individuals and families experience hardship from student loans and other types of debts, and bankruptcy is a valid tool for finding relief. An attorney may work to understand their client’s situation and provide valuable support and guidance during the bankruptcy process.