Private Student Loan Bankruptcy Fairness Act of 2025
Private Student Loan Bankruptcy Fairness Act of 2025
Plain Language Summary
# Private Student Loan Bankruptcy Fairness Act of 2025 - Summary **What It Would Do:** This bill would make it easier for people to eliminate private student loans through bankruptcy. Currently, both federal and private student loans are difficult to discharge in bankruptcy—borrowers must prove the loans cause "undue hardship," a legal standard that's hard to meet. This bill would remove that requirement specifically for private student loans, allowing them to be wiped out in bankruptcy like most other debts. **Who It Affects:** The bill primarily affects people struggling with private student loan debt. It could help borrowers who cannot afford their loans and have exhausted other repayment options.
Private lenders and loan companies could be negatively affected, as they would recover less money from borrowers in financial distress. **Current Status:** The bill (HR 423) was introduced by Rep. Steve Cohen (D-TN) in the 119th Congress and is currently in committee, meaning it has not yet been voted on by the full House. Bills in committee can be debated, modified, or stalled indefinitely before reaching a floor vote.
CRS Official Summary
Private Student Loan Bankruptcy Fairness Act of 2025 This bill modifies the treatment of certain student loans in bankruptcy.Specifically, it allows private student loans to be discharged in bankruptcy regardless of whether a debtor demonstrates undue hardship. Under current law, student loans may be discharged in bankruptcy only if the loans impose an undue hardship on the debtor.
Latest Action
Referred to the House Committee on the Judiciary.