Senator Warren Urges the Department of Justice to Release New Student Loan Bankruptcy Guidance
“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, it is critical that you issue and implement this updated guidance without delay.”
Washington D.C. – U.S. Senator Elizabeth Warren (D-Mass.) sent a letter to the Department of Justice (DOJ) urging DOJ to issue and implement updated student debt bankruptcy guidance without delay following the Biden-Harris administration’s historic decision to cancel up to $20,000 in student debt for up to 43 million borrowers and overhaul the student loan system.
In March of this year, Senator Warren joined a similar letter led by Senators Durbin (D-Ill), Murray (D-Wash.), and Schumer (D-N.Y.) to DOJ and the Department of Education (ED) requesting an update on efforts to improve how the agencies handle undue hardship claims by student borrowers in bankruptcy proceedings. The response from DOJ indicated that DOJ and ED “are collaborating to develop guidance for implementing [the undue hardship standard] in a more consistent and streamlined way.” Months have passed since the initial request and borrowers are still waiting for this updated guidance.
“The administration’s bold action to provide debt relief and reform the student loan system for current and future borrowers underscores the urgent need for the Department of Justice (DOJ) to do its part to ensure that borrowers who continue to struggle with student debt have a path toward additional relief,” wrote Senator Warren.
Senator Warren also reached out to DOJ in July of this year to request a staff-level briefing on the delay in issuing the updated guidance, only to receive a brief email with no details about the guidance’s status. In several instances described in the letter, borrowers have struggled to receive relief because of the failures of the existing bankruptcy guidance and consequent actions by DOJ and ED.
“Those who do pursue undue hardship claims face aggressive litigation challenges by the federal government that fail to acknowledge borrowers’ challenges in navigating the student loan system,” wrote Senator Warren.
Senator Warren is demanding that DOJ prioritize updating the student bankruptcy guidance and provide clear answers about the status of its plans to address bankruptcy discharge claims no later than September 15, 2022.
Senator Warren is one of the nation’s leading voices for student loan borrowers:
- Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Sherrod Brown (D-Ohio), and U.S. Representatives Pramila Jaypal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona, urging the Department of Education (ED) to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College.
- Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Pramila Jayapal (D-Wash.), Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
- Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representative Ayanna Pressley (D-Mass.) released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
- Senator Warren, along with Senators Van Hollen (D-Md.), Blumenthal (D-Conn.), and Smith (D-Minn.), sent letters to four federal loan servicers, requesting information on their plans to support borrowers when student loan payments resume.
- Senator Warren, along with Senators Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), and Chris Van Hollen (D-Md.) sent a letter to Maximus, the company that is assuming Navient’s federal student loans servicing contract, questioning its troubling history and seeking assurances that borrowers will receive appropriate services and protections during the transition.
- Senator Warren, along with Senators Cory A. Booker (D-N.J.), Sherrod Brown (D-Ohio), Bernard Sanders (I-Vt.), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.) sent a letter to the Department of Education urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default.
- Senator Warren, along with Senators Van Hollen, Blumenthal, Brown, Smith, Edward J. Markey (D-Mass.), and Robert Menendez (D- NJ.) sent letters to the heads of Pennsylvania Higher Education Assistance Agency, Granite State, and Navient calling on them to correct past errors with borrowers’ accounts and address growing concerns over their preparedness to transfer millions of borrowers to new servicers.
- Senator Warren, along with Senator Edward J. Markey (D-Mass.) and Representative Ayanna Pressley (D-Mass.), released a report that detailed the ongoing failures of the Public Service Loan Forgiveness program for public servants in Massachusetts.
- At a hearing in July 2021, Senator Warren pushed for borrower protections after a major student loan servicing shakeup.
- In July 2021, Senator Warren released a statement regarding the end of the Pennsylvania Higher Education Assistance Agency's (PHEAA) contract servicing student loans with the Department of Education.
- In June 24, 2021, Senator Warren and John Kennedy (R-La.) called on PHEAA CEO to address concerns about false and misleading statements made during a subcommittee hearing on student loans, which was chaired by Senator Warren.
- In May 2021, Senator Warren led her colleagues in sending a letter requesting information about the steps the Department of Education and the Office of Federal Student Aid (FSA) are taking to help transition millions of federal student loan borrowers back into repayment ahead of the scheduled end to the pause on student loan payments and interest in September.
- In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.
- That same month at her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren called out PHEAA for its mismanagement of the Public Student Loan Forgiveness Program.
- Senator Warren also questioned Jack Remondi, CEO of Navient, on the company's long history of abusive and misleading behavior towards borrowers and their profiting off the broken student loan system.
- In March 2021, Senators Warren and Bob Menendez (D-N.J.) applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan.
- Last Congress, Senator Warren introduced the Consumer Bankruptcy Reform Act and in 2019, co-led the Student Borrower Bankruptcy Relief Act with Senator Durbin (D-Ill.) to make student loans dischargeable through bankruptcy.
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