At the Pasadena City College graduation ceremony on June 14, 2019, a graduating student wears a money lei, a necklace made from US dollars bills. ROBYN Beck/AFP via Getty ImagesJohn Cornyn and Dick Durbin introduced a bipartisan bill that would allow borrowers to discharge student loans by filing bankruptcy.After a period of 10 years, the bill would eliminate the requirement that you prove "undue hardship".It is not common to prove hardship successfully and it can be costly for the borrower.Check out more stories from Insider's business page.Borrowers who want to discharge student loans via bankruptcy must prove that they are in extreme circumstances. This is difficult and rare. Senior Republicans and Democrats want to change this.Senator John Cornyn, Texas's Majority Whip, and Senate Majority Whip Dick Durbin introduced the FRESH Start Through Bankruptcy Bill of 2021. This would allow borrowers to file for bankruptcy relief of federal student loans that they owe after ten years. According to federal law, student debt can only be discharged through bankruptcy if there is "undue hardship." This bill would eliminate the requirement for federal loans.Durbin stated that student loan debt will follow you to the grave. He said, "Our bipartisan bill finally allows student borrowers - many of whom were misled into taking out expensive loans by predatory for profit colleges - to get back on track when there is no other realistic way to repay their loans."The bill would also make student loans available for bankruptcy proceedings after 10 year.For federal student loans and private student loans due in less than ten years, keep the undue hardship option;Colleges with student loans that exceed one-third of their students must partially reimburse the government if student loans are discharged.For borrowers who are unable to repay their student debts, bankruptcy is an option.It would be much easier for borrowers in bankruptcy to discharge their loans if the undue hardship requirement was removed. Borrowers currently need to file an additional action against their student loan company. This can be costly and time-consuming and often requires more resources than the borrower.Continue the storyThis bill is bipartisan and requires colleges to repay the government in certain situations. It will likely be easier to pass Congress than student-debt cancellation which only Democrats support.The Supreme Court heard Conti v. Arrowood Indemnity Co. last month. A borrower with student loans tried to discharge them through bankruptcy. However, the court denied her argument as she didn't prove undue hardship.Durbin stated that student loans should not be restructured through bankruptcy because of undue hardship. Hearing last week. "There should be another alternative. It is time to go back to 1998 when relief was available for borrowers after a lengthy waiting period.Business Insider has the original article.
