November 18th 2023.
It has been three years since a nationwide pause on student loan payments was implemented during the COVID-19 pandemic. The Biden Administration has taken advantage of this time to make it easier for Americans to discharge student loans in bankruptcy. Just last year in November, the changes went into effect, giving eligible borrowers the opportunity to reduce or eliminate their student loan debt.
According to a Department of Justice news release, the number of filers from November 2022 through September 2023 had a higher rate than the average rate before the pandemic. In fact, 632 borrowers filed bankruptcy to get rid of student loans. 99% of the cases that have had orders or judgments entered have resulted in a full or partial discharge.
To be granted a bankruptcy discharge of student loan debt, Fox Business explains that borrowers must prove they made a good-faith effort to repay the debt, demonstrate an inability to pay in the present, and not be able to foresee repaying loan amounts in the future.
Vanita Gupta, the Associate Attorney General, stated that after a year-long review of the results, the new benchmarks have made a positive difference in the lives of borrowers. Rich Cordray, the Chief Operating Officer of the Department of Education's Office of Federal Student Aid, also agreed, noting that the improved process is helping struggling borrowers.
According to federal data, borrowers have average bill amounts that range from $200 to $299 per month. It appears the Biden Administration's changes have been successful, providing much-needed relief to those in financial difficulty due to student loan debt.
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