Private Student Loan Bankruptcy Fairness Act of 2025
Sponsored By: Representative Cohen
Introduced
Summary
This bill would let many private student loans be discharged in bankruptcy without proving "undue hardship". It redraws the test for which educational debts are protected from discharge by focusing on whether a program is largely funded by a government unit or a nonprofit.
Show full summary
- Families and borrowers: Private student loan borrowers could erase qualifying private student debt through bankruptcy without meeting the current undue hardship test.
- Lenders and loan servicers: Holders of private student loans would face greater risk of discharge and potential losses on affected loans.
- Bankruptcy cases and courts: The bill rewrites 11 U.S.C. 523(a)(8) by removing a separate subparagraph and refocusing the funding-source criterion. It would take effect on enactment and apply only to bankruptcy cases filed on or after that date.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 1 benefits, 0 costs, 0 mixed.
Easier bankruptcy relief for private student loans
If enacted, this would make it easier to wipe out many private student loans in bankruptcy. The bill would remove the separate category that blocks many “qualified education loans” from discharge. It would refocus the rule on programs where substantially all funds come from a government unit or a nonprofit institution, which would stay protected from discharge. These changes would apply only to bankruptcy cases filed on or after the date it becomes law.
Sponsors & CoSponsors
Sponsor
Cohen
TN • D
Cosponsors
Davis (IL)
IL • D
Sponsored 1/15/2025
Swalwell
CA • D
Sponsored 1/15/2025
Moore (WI)
WI • D
Sponsored 1/15/2025
Brownley
CA • D
Sponsored 1/15/2025
Khanna
CA • D
Sponsored 5/1/2025
Roll Call Votes
No roll call votes available for this bill.
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