Rise in Student Loan Borrowers Seeking Bankruptcy Discharges

The Biden administration's policy change has made it easier for struggling borrowers to have their federal student loans discharged in bankruptcy court, resulting in a significant increase in bankruptcy cases filed by student loan borrowers. The majority of borrowers seeking discharge have received full or partial discharges. Student debt in the U.S. exceeds $1.7 trillion, with around 7% of borrowers having a balance of over $100,000. Previously, student loans had a high bar for bankruptcy discharge, but the new policy represents a softening of the stance on the discharge of federal student loans, moving towards treating them like other debt.