To amend title 11 of the United States Code to modify the dischargeability of debts for certain educational payments and loans.
Sponsors
Legislative Progress
IntroducedMr. Cohen (for himself, Mr. Davis of Illinois, Mr. Swalwell, …
Summary
What This Bill Does
The Private Student Loan Bankruptcy Fairness Act of 2025 removes special protections that currently prevent private student loans from being discharged in bankruptcy. Under current law, student loans (both federal and private) are treated differently than other consumer debts and are nearly impossible to discharge through bankruptcy. This bill changes that by allowing borrowers to discharge private student loans the same way they can discharge credit card debt or medical bills.
Who Benefits and How
Borrowers with private student loans are the primary beneficiaries. They would gain the ability to include their private student loan debt in bankruptcy proceedings and potentially have it discharged, providing a path to financial relief that is currently blocked. This is particularly significant for borrowers who took out high-interest private loans for education, faced predatory lending practices, or experienced financial hardship that makes repayment impossible.
Who Bears the Burden and How
Private student loan lenders and servicers (such as Sallie Mae, Navient, and private banks) would bear the primary burden. They would face increased risk of losses when borrowers file for bankruptcy, as private student loans would no longer have special protected status. This could lead to tighter lending standards, higher interest rates on new private student loans, or reduced availability of private student loan products.
Key Provisions
- Strikes the exception for private educational loans: Removes subparagraph (B) of Section 523(a)(8), which currently protects "qualified education loans" from discharge
- Preserves protection for government-backed loans: Federal student loans and loans from programs where "substantially all of the funds are provided by" a governmental unit remain non-dischargeable
- Immediate effectiveness: Takes effect upon enactment with no transition period
- Prospective application: Only applies to bankruptcy cases filed after the law takes effect; does not retroactively affect pending cases
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
This bill aims to amend Title 11 of the United States Code, specifically addressing the dischargeability of debts related to certain educational payments and loans.
Policy Domains
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
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