Warren Grills DOJ on Why It’s Still Trying to Crush Student Debtors in Bankruptcy Court

Just over a week after President Joe Biden unveiled a plan to cancel $10,000 in federal student loan debt for most borrowers and reform the income-driven repayment program, his administration on Thursday was rebuked once again for its ongoing effort to deny bankruptcy relief to some of the nation’s most hard-pressed student debtors.

In a letter sent to Attorney General Merrick Garland, Sen. Elizabeth Warren (D-Mass.) asked about the status of the Department of Justice’s “work to update guidance on how it handles undue hardship claims by student borrowers in bankruptcy proceedings.”

“To support the administration’s efforts to overhaul the student loan system and ensure that bankruptcy relief is a viable option for borrowers in severe financial straits,” Warren wrote, “it is critical that you issue and implement this updated guidance without delay.”

Although Biden spent years as a senator siding with lenders and making it more difficult for Americans to reduce educational loan repayment obligations in court, he promised last year to “allow for student debt to be relieved in bankruptcy,” which would help give overwhelmed borrowers a fresh financial start.

Nevertheless, as The Lever first reported in early February, Biden administration officials moved to overturn a federal judge’s ruling eliminating nearly $100,000 in student debt held by 35-year-old Ryan Wolfson, a man with epilepsy who has difficulty securing full-time employment.

In response to public outcry, the Department of Education announced that it would withdraw its notice of appeal in Wolfson’s case. The agency added that “any borrower in an adversary bankruptcy proceeding can request and receive a stay” during the department’s review of current policies, which has been ongoing since July 2021.

Less than a week later, however, the Biden administration filed another notice of appeal in an attempt to block a federal judge’s decision to grant Monique Wheat—a mother of three with an annual income of roughly $21,000—more than $100,000 in student debt relief, as reported by The Lever.

Following another round of backlash, the Department of Education dropped its appeal in Wheat’s case as well, prompting investigative journalist Julia Rock to ask: “Does this signal a policy change at the agency?”

While welcoming the pair of reversals, a coalition of progressive advocacy groups urged Secretary of Education Miguel Cardona to immediately stop fighting countless other individuals seeking to discharge their student loan debt in bankruptcy court, writing that his department is “moving slowly to implement” promised reforms and “does not have a complete grasp on the cases currently pending.”

 

This story has been edited for length. The full story can be read at Common Dreams

 

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