Legislative
Report
4
Student Loans and Stalemate
by Maureen Thompson, NACBA Legislative Director
With Congress gridlocked and control of the Senate at stake in the midterm elections, 2014 has been a year of continued legislative stalemate in Washington, D.C.
NACBA has continued to position itself in Washington as the preeminent consumer bankruptcy organization with far ranging, national expertise in all matters of bankruptcy law and practice. From debt collection to student loans to retirement security, NACBA is engaging with members of Congress, regulators and allies in the consumer advocacy community to achieve a fair and effective bankruptcy system for our members and clients.
A primary focus of our work has been on restoring bankruptcy protection for student loans. Since the release of the 2012 “Student Loan Debt Bomb” report, which helped to put this issue on the national agenda, NACBA has been at the fore of raising public awareness and workable policy solutions for addressing student loan debt and its increasing financial devastation on American families. NACBA has maintained an active role in the debate, advocating for private student loan debt bankruptcy reform, adjustments to the undue hardship standard, and other mechanisms for helping Americans who are trapped with insurmountable student loan debt.
On the legislative front, NACBA worked with our longstanding Congressional allies on proposals aimed at addressing aspects of the student loan debt issue. Specifically, NACBA and the National Consumer Law Center jointly endorsed the Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2014, introduced by Congressman John Conyers (D-MI). This legislation addresses aggressive collection tactics employed by some student loan creditors against debtors who have sought to discharge their student loans under the undue hardship standard.
As NACBA members know all too well, undue hardship has proven to be an increasingly challenging and opaque standard for attorneys to meet. When attorneys do pursue an undue hardship for a clearly deserving borrower, they often are met with hardball tactics from loan servicers, who are relentless in their challenges and discovery requests. The costs of undue hardship litigation are often all too high for already financially devastated clients. Congressman Conyers’ bill would empower bankruptcy judges to award costs and reasonable attorney’s fees to a consumer who successfully obtained discharge for their liability for a student loan debt based on undue hardship.