Elizabeth Warren and Ron DeSantis agree on one way student-loan borrowers should get a path to relief: getting rid of debt in bankruptcy court

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Elizabeth Warren and Ron DeSantis agree on one way student-loan borrowers should get a path to relief: getting rid of debt in bankruptcy court
Sen. Elizabeth Warren, Gov. Ron DeSantis.Michael A. McCoy/Getty Images, SERGIO FLORES/AFP via Getty Images
  • Sen. Warren and Gov. DeSantis have expressed support for student loans to be dischargeable in bankruptcy.
  • The Education and Justice Departments announced reforms to the process last year.
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It's not often Massachusetts Sen. Elizabeth Warren and Florida Gov. Ron DeSantis agree on policies. But a path for student-loan borrowers to get rid of their debt in court might just be that opportunity.

When a student-loan borrower finds they cannot afford their monthly payments, they cannot simply declare bankruptcy and be absolved of their debt. They have to go to court and meet a high standard known as "undue hardship," which requires borrowers to show that they could not maintain a minimal standard of living, that their circumstances weren't likely to improve, and that they had made a good-faith effort to repay their debt.

The standard was strengthened due to a 2005 bankruptcy law that President Joe Biden supported when he was a senator, and it expanded undue hardship to borrowers with private student loans, along with federal. Given that courts often had a very strict interpretation of the rule — keeping many borrowers from getting relief — the Education and Justice Departments in November announced a series of reforms to the process to make it easier for borrowers to access bankruptcy.

And it's something both Warren and DeSantis support. As part of his presidential campaign, DeSantis recently unveiled his "Declaration of Economic Independence," which included ten pillars he said would support the economy and middle class. One of those pillars included reforming education — and the student-loan system.

"The reality is we've had a generation of students go deep into debt, and some of them end up with degrees in things like zombie studies, which are just not making a difference," DeSantis said during his remarks.

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"At the same time, I have sympathy for some of these students because I think they were sold a bill of goods. I think these universities knew that they could take all this federal loan money," he said, adding that colleges should be held financially accountable if students were unable to pay off a "successful" degree and that "student loans should be dischargeable in bankruptcy."

While Warren does not agree with DeSantis' stance against broad debt relief — she is a strong supporter of Biden's plan to cancel up to $20,000 in debt for borrowers and has pushed for more — she also has said bankruptcy should be a viable option for borrowers, especially with federal payments set to resume in October after an over three-year pause.

At the end of July, Warren sent a letter to Attorney General Merrick Garland requesting an update on the Justice Department's implementation of the new bankruptcy reforms. She said that the undue hardship standard "has been narrowly interpreted by courts, and has proven to be so difficult to meet that most borrowers do not even attempt to discharge their student loans through the bankruptcy process. Between 2015 and 2020, roughly 250,000 borrowers filed for bankruptcy annually. Of those, less than one percent saw their student loan debt discharged."

It appears the issue is picking up steam on both sides of the aisle. GOP Rep. Thomas Massie posted a poll on X, formerly Twitter, last week asking if student loans should be dischargeable in bankruptcy, with 67% of respondents — 19,711 people voted, per X — saying yes.

Along with the Education and Justice Department reforms, the Consumer Financial Protection Bureau has also kept an eye on the bankruptcy process for borrowers. Last year, the agency released a report outlining the options for relief that borrowers with private student loans have, and it said that there are several types of education loans that do not have to meet the undue hardship standard: loans to pay for education at places ineligible for federal funding, like unaccredited colleges, loans made to cover fees and living expenses while studying for professional exams, and loans to a student attending a school less than half-time.

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Still, both Warren and DeSantis have argued all borrowers should face an easier path to bankruptcy if they are dealing with unaffordable student debt.

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