Bill Overview
Title: Student Borrower Bankruptcy Relief Act of 2022
Description: This bill allows student loans to be discharged in bankruptcy. Under current law, these loans are only dischargeable if such debt imposes an undue hardship on the debtor.
Sponsors: Rep. Nadler, Jerrold [D-NY-10]
Target Audience
Population: Individuals with student loans that could be affected by changes to bankruptcy discharge laws
Estimated Size: 43500000
- Student loans are a form of debt carried by individuals globally, but this legislation directly affects U.S. federal student loans.
- There are approximately 43.5 million student loan borrowers in the U.S. according to the Department of Education.
- Globally, student debt is an issue predominantly in countries where higher education is not free or subsidized, primarily affecting countries like the U.S., Canada, the UK, and Australia.
- The bill will specifically impact individuals who have declared or are considering declaring bankruptcy and have outstanding student loans.
- Individuals who fail to meet the 'undue hardship' standard under current law would particularly be impacted as this limits their bankruptcy debt relief options related to student loans.
Reasoning
- The policy targets a quite specific group of individuals who are currently facing or might face bankruptcy and carry student loan debt - specifically, about 43.5 million borrowers in the U.S.
- Within the scope of the policy's budget, it aims to alleviate financial stress for those in bankruptcy due to student loans by removing the difficulty of proving undue hardship in discharging these loans.
- Because bankruptcy is a significant financial decision, the impact will likely be high on those affected, as they gain a potential pathway to financial rehabilitation.
- The group most likely impacted are younger adults entering the workforce, as well as older individuals who went back to school later in life or have parent plus loans affecting their current financial status.
Simulated Interviews
Freelance Graphic Designer (Seattle, WA)
Age: 28 | Gender: female
Wellbeing Before Policy: 3
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- I believe allowing student loans to be discharged in bankruptcy would offer immense relief for people like me who tried to make payments but faced unforeseen financial difficulties.
- This would have been a significant help during the peak of financial stress but could still aid in rebuilding my financial stability.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 3 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
High School Teacher (Detroit, MI)
Age: 35 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- This act could finally give me the breathing room I need to manage my other debts and start saving.
- It’s a tough time to be in public service with these financial burdens.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retail Worker (Austin, TX)
Age: 24 | Gender: other
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- With this policy, I might consider bankruptcy which was never on the table before because of the student loans.
- I hope it doesn’t come to that, but it’s good to know there would be an option that relieves that burden.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 6 |
| Year 20 | 7 | 6 |
Software Developer (Chicago, IL)
Age: 42 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- While I’m managing, the option is reassuring especially if things get tougher.
- This policy may indirectly help by possibly encouraging lenders to offer better terms knowing options for discharge are easier.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 8 | 8 |
Administrative Assistant (Brooklyn, NY)
Age: 56 | Gender: female
Wellbeing Before Policy: 3
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Discharging these loans in bankruptcy could really save me as I approach retirement.
- It’s been a constant worry, not being able to help my children while managing own debts.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 3 |
| Year 2 | 6 | 3 |
| Year 3 | 7 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 6 |
Environmental Scientist (Boulder, CO)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- While it doesn’t change my situation directly, it may help shift national policy discourse on student debt relief.
- I’m grateful I’ve been able to manage, but I’d welcome changes that help others less fortunate.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Barista (Boston, MA)
Age: 29 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- This act is a beacon of hope amidst financial struggles, potentially opening up pathways to reset my financial life.
- Restarting without student loans would make all the difference.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Nurse (Phoenix, AZ)
Age: 50 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- If enacted, it could significantly reduce stress and improve life quality for those of us with limited working years ahead.
- I've made consistent payments but the financial issues add to health worries.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 7 |
Retired Military (Orlando, FL)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 13/20
Statement of Opinion:
- The policy is beneficial but at this point, my retirement fund projections show I’ll be able to manage.
- It’s crucial for younger families trying to establish stability, though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Entrepreneur (San Francisco, CA)
Age: 33 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 8.0 years
Commonness: 10/20
Statement of Opinion:
- It’s imperative for folks like me who are grinding to get small businesses off the ground and dealing with the weight of student debt.
- Bankruptcy would be more viable with this policy and a potential fresh start.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $1000000000 (Low: $800000000, High: $1200000000)
Year 2: $1050000000 (Low: $850000000, High: $1250000000)
Year 3: $1100000000 (Low: $900000000, High: $1300000000)
Year 5: $1200000000 (Low: $1000000000, High: $1400000000)
Year 10: $1500000000 (Low: $1300000000, High: $1700000000)
Year 100: $3000000000 (Low: $2700000000, High: $3300000000)
Key Considerations
- The bill could increase the number of bankruptcy filings due to easier discharge options, affecting court and administrative resources.
- Potential changes in borrower behavior regarding loan repayment if they know loans can be discharged.
- Concerns over moral hazard, where borrowers may intentionally file for bankruptcy to clear debts.