H.R. 4444

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4444 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 4444

To provide a more equitable discharge standard for student loan 
borrowers.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

July 16, 2025

Mr. Correa (for himself, Ms. Adams, Ms. Balint, Mr. Carter of 
Louisiana, Mr. Fields, Ms. Jayapal, Mr. Johnson of Georgia, Ms. Lee of 
Pennsylvania, Ms. Lofgren, Ms. Norton, Ms. Ross, Mr. Swalwell, Ms. 
Tlaib, Mr. Thanedar, Mr. Tonko, and Ms. Velazquez) introduced the 
following bill; which was referred to the Committee on the Judiciary

_______________________________________________________________________

A BILL

To provide a more equitable discharge standard for student loan 
borrowers.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Student Loan Bankruptcy Improvement 
Act of 2025''.

SEC. 2. FINDINGS.

The Congress finds the following:
(1) Student loan borrowers deserve an opportunity to 
discharge debt using a fair, nation-wide standard for relief.
(2) The current standard of ``undue hardship'' fails to 
provide an achievable avenue for relief of student loan debt 
requiring significant costs and a paperwork burden.
(3) Student loan borrowers rarely meet the arbitrary and 
draconian standard of ``undue hardship,'' especially in 
jurisdictions using the ``Brunner'' test, with only 0.01% 
successfully being discharged as of 2022.
(4) The criteria utilized in the ``Brunner'' test, which is 
used by most bankruptcy courts in the United States, is 
inconsistent with the main goal of bankruptcy of giving honest 
debtors a ``fresh start,'' enabling them to more fully 
participate and contribute to the economy.
(5) The ``Brunner'' test was developed by the courts 
decades ago when debtors could discharge their student loans in 
bankruptcy by simply waiting five or seven years--it should no 
longer be used now that the waiting period for discharge was 
eliminated by Congress.
(6) By changing the standard of hardship, Congress would 
provide bankruptcy courts with needed flexibility to adopt more 
reasonable criteria in determining discharge standards for 
student loan debt.
(7) Adopting this new ``hardship'' standard does not negate 
requirements for discharge under bankruptcy proceedings like 
means testing, disclosure requirements, and exemption 
limitations, securing bankruptcy's integrity and benefitting 
both debtors and creditors who have an increased opportunity 
for repayment.
(8) As of June 2025, around six million borrowers of 
Federal student loans are passed due by at least 90 days.
(9) A majority of borrowers with 90 days or more past due 
student loans as of June 2025 could move into default by 
September 2025.
(10) Millions of student loan borrowers are facing 
significant credit score declines making it more expensive or 
difficult to get necessary insurance, loans, and credit cards.
(11) The vast majority of debtors seeking bankruptcy 
discharges for student loans never obtained degrees or got 
degrees that have not enabled them to secure better employment 
or have a higher earning potential as predicted when Congress 
adopted the ``undue hardship'' standard.
(12) According to a Duke Law Journal article, between 2011 
and 2019, less than 0.1 percent of applications made by student 
loan debtors in bankruptcy court seeking a discharge of student 
loan debt were successful, largely because attorneys discourage 
their clients from seeking an adversary proceeding on the 
belief that it is too hard to meet the undue hardship standard.
(13) Each year, less than one percent of the approximately 
250,000 people who file for bankruptcy seek to discharge 
student loan debt based on ``undue hardship,'' a mere fraction 
of the nearly 43 million people who have Federal student loan 
debt.
(14) Between November 2022 and September 2024, 
approximately 2,500 people sought to discharge student loan 
debt through bankruptcy.
(15) The Department of Education (Department) recently 
reported that twenty percent of borrowers are in default and 
another four million are between three and six months behind on 
their payments. The Department estimates that as many as 10 
million borrowers could be in default within a few months.
(16) There is little evidence of debtors abusing the 
bankruptcy system by seeking unfair discharges of student loan 
obligations, a concern raised by Congress when it adopted the 
``undue hardship'' standard.
(17) The concerns of abuse were addressed and minimized 
with the passage in 2005 of the Bankruptcy Abuse Prevention and 
Consumer Protection Act with the enactment of a rigorous Means 
Test to evaluate debtors' ability to repay debts.
(18) Student loan debt owed by Americans who file for 
bankruptcy with student loans is often never paid, whereas 
bankruptcy proceedings provide an opportunity to address this 
reality.
(19) With the restart of student loan collections, the 
number of borrowers with student loan debt is expected to rise. 
The change to a ``hardship'' standard will facilitate fair and 
appropriate discharges and repayment plans.

SEC. 3. AMENDMENT 11.

Section 523(a)(8) of title 11, United States Code, is amended by 
striking ``undue''.

SEC. 4. APPLICATION OF AMENDMENT.

The amendment made by this Act shall apply with respect to cases 
commenced before, on, and after the date of the enactment of this Act.
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