Cohen bill addresses student loan debt

WASHINGTON — Private student loan debt should be treated just like other debt in bankruptcy, according to U.S. Rep. Steve Cohen, who reintroduced a bill Wednesday that would make such debt dischargeable — erasable — by bankruptcy judges.

With student loan debt now more than $1 trillion, including $150 billion in private student loan debt, undoing the 2005 change in the law that shields private lenders is “long overdue,” Cohen said.

“People who seek higher education to better their futures should not be dissuaded from doing so by the threat of financial ruin,” he said in a prepared statement.

But the bill doesn’t go far enough, according to Alan Collinge, a Tacoma, Wash., activist and founder of StudentLoanJustice.org., who touted Cohen’s earlier bill from the Occupy Wall Street encampment in New York City in 2011.

Collinge, 42, who defaulted on his loans and hasn’t been a student since 1998, said all student loan debt needs to be dischargeable in bankruptcy and that the bankruptcy exemption for nonprofit lenders or guarantors also needs to be axed.

Collinge noted that this is the fifth time such legislation has been introduced.

“I’m hopeful this is the final time, that this language goes through,” he said. “Bankruptcy absolutely must be returned to all student loans, not just private student loans.”

In announcing the new bill, Cohen and U.S. Rep. DannyDavis, D-Ill., explained that lawmakers limit what can’t be erased in bankruptcy, and noted those include child support, overdue taxes and criminal fines. They said private student loan debt should not be in the same category.