With the average student graduating from colleges in Connecticut with $27,000 in debt, U.S. Sen. Richard Blumenthal wants to allow students to have their debt dismissed when filing for bankruptcy.
Currently, students’ college debt burden follows them throughout their lives until it is paid in full, regardless of whether they have declared bankruptcy.
“I believe that students should have the option to discharge student loan debt in bankruptcy — as a last resort. Student debt should be treated like other financial obligations in bankruptcy proceedings. The current system harshly punishes young students who — without advice needed to make informed financial decisions – commit to loans that will follow and haunt them for a lifetime,” the Democratic senator wrote the state’s college presidents this week.
Blumenthal intends to introduce legislation in Congress aimed at tackling the massive debt students leave school with and wrote to the college presidents soliciting their feedback.
“While most work to pay off their student loans at all cost, some who fall behind in payments find their liabilities are simply impossible to discharge. Even [if] access to bankruptcy were allowed, student loans would remain a sound investment for lenders and our country,” he wrote.
Blumenthal wants to provide students with options for refinancing their college loans.
“A more detailed proposal to refinance student loans will be released in the coming weeks, and I hope that you will support this effort to help students liberate their lives and livelihoods from a crushing debt burden. The expense of this initiative can be amply covered by closing special interest tax loopholes or enacting the Buffett rule as it is popularly known, of taxing incomes above $1 million at 30 percent,” Blumenthal wrote.
Read Blumenthal’s letter here.