[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4444 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 4444
To provide a more equitable discharge standard for student loan
borrowers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 16, 2025
Mr. Correa (for himself, Ms. Adams, Ms. Balint, Mr. Carter of
Louisiana, Mr. Fields, Ms. Jayapal, Mr. Johnson of Georgia, Ms. Lee of
Pennsylvania, Ms. Lofgren, Ms. Norton, Ms. Ross, Mr. Swalwell, Ms.
Tlaib, Mr. Thanedar, Mr. Tonko, and Ms. Velazquez) introduced the
following bill; which was referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To provide a more equitable discharge standard for student loan
borrowers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Student Loan Bankruptcy Improvement
Act of 2025''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Student loan borrowers deserve an opportunity to
discharge debt using a fair, nation-wide standard for relief.
(2) The current standard of ``undue hardship'' fails to
provide an achievable avenue for relief of student loan debt
requiring significant costs and a paperwork burden.
(3) Student loan borrowers rarely meet the arbitrary and
draconian standard of ``undue hardship,'' especially in
jurisdictions using the ``Brunner'' test, with only 0.01%
successfully being discharged as of 2022.
(4) The criteria utilized in the ``Brunner'' test, which is
used by most bankruptcy courts in the United States, is
inconsistent with the main goal of bankruptcy of giving honest
debtors a ``fresh start,'' enabling them to more fully
participate and contribute to the economy.
(5) The ``Brunner'' test was developed by the courts
decades ago when debtors could discharge their student loans in
bankruptcy by simply waiting five or seven years--it should no
longer be used now that the waiting period for discharge was
eliminated by Congress.
(6) By changing the standard of hardship, Congress would
provide bankruptcy courts with needed flexibility to adopt more
reasonable criteria in determining discharge standards for
student loan debt.
(7) Adopting this new ``hardship'' standard does not negate
requirements for discharge under bankruptcy proceedings like
means testing, disclosure requirements, and exemption
limitations, securing bankruptcy's integrity and benefitting
both debtors and creditors who have an increased opportunity
for repayment.
(8) As of June 2025, around six million borrowers of
Federal student loans are passed due by at least 90 days.
(9) A majority of borrowers with 90 days or more past due
student loans as of June 2025 could move into default by
September 2025.
(10) Millions of student loan borrowers are facing
significant credit score declines making it more expensive or
difficult to get necessary insurance, loans, and credit cards.
(11) The vast majority of debtors seeking bankruptcy
discharges for student loans never obtained degrees or got
degrees that have not enabled them to secure better employment
or have a higher earning potential as predicted when Congress
adopted the ``undue hardship'' standard.
(12) According to a Duke Law Journal article, between 2011
and 2019, less than 0.1 percent of applications made by student
loan debtors in bankruptcy court seeking a discharge of student
loan debt were successful, largely because attorneys discourage
their clients from seeking an adversary proceeding on the
belief that it is too hard to meet the undue hardship standard.
(13) Each year, less than one percent of the approximately
250,000 people who file for bankruptcy seek to discharge
student loan debt based on ``undue hardship,'' a mere fraction
of the nearly 43 million people who have Federal student loan
debt.
(14) Between November 2022 and September 2024,
approximately 2,500 people sought to discharge student loan
debt through bankruptcy.
(15) The Department of Education (Department) recently
reported that twenty percent of borrowers are in default and
another four million are between three and six months behind on
their payments. The Department estimates that as many as 10
million borrowers could be in default within a few months.
(16) There is little evidence of debtors abusing the
bankruptcy system by seeking unfair discharges of student loan
obligations, a concern raised by Congress when it adopted the
``undue hardship'' standard.
(17) The concerns of abuse were addressed and minimized
with the passage in 2005 of the Bankruptcy Abuse Prevention and
Consumer Protection Act with the enactment of a rigorous Means
Test to evaluate debtors' ability to repay debts.
(18) Student loan debt owed by Americans who file for
bankruptcy with student loans is often never paid, whereas
bankruptcy proceedings provide an opportunity to address this
reality.
(19) With the restart of student loan collections, the
number of borrowers with student loan debt is expected to rise.
The change to a ``hardship'' standard will facilitate fair and
appropriate discharges and repayment plans.
SEC. 3. AMENDMENT 11.
Section 523(a)(8) of title 11, United States Code, is amended by
striking ``undue''.
SEC. 4. APPLICATION OF AMENDMENT.
The amendment made by this Act shall apply with respect to cases
commenced before, on, and after the date of the enactment of this Act.
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