Sen. Richard Durbin, D-Ill., renewed his push Thursday to allow bankruptcy judges to cram down private student loan debt, introducing a bill on the issue with 12 other Democrats.
The Illinois Democrat argued the legislation is urgently needed, pointing to statistics from the Consumer Financial Protection Bureau that show $165 billion in outstanding private student loan debt.
"Too many Americans are carrying around mortgage-sized student loan debt that forces them to put off major life decisions like buying a home or starting a family," Durbin said in a press release. "It's not only young people facing this crisis, it is parents, siblings and even grandparents who co-signed private loans long ago and are still making payments decades later. It's time for action. We can no longer sit by while this student debt bomb keeps ticking."
The bill is being co-sponsored by several other Democrats, including Sens. Elizabeth Warren of Massachusetts, Jack Reed of Rhode Island and Kristen Gillibrand of New York.
Yet its chances of passage are slim to none in the Republican-controlled chamber. Durbin previously introduced a bill in 2012 when Democrats were in charge, but was unable to get much traction on it. Republicans and bankers fiercely oppose the bill, arguing it would add risk to private student lending and could restrict the availability of credit to college students.
Since 2005, both federal student loans and private loans have been barred from discharge in bankruptcy, except in rare circumstances, as a result of a change in the law that put private lenders on the same footing as the federal government. But the rising level of student loan debt has begun to worry policymakers, including President Obama, who announced this week a student "bill of rights" that is meant to improve servicing on student loans.
In 2009, Durbin also tried, without success, to pass a bill that would have allowed borrowers to discharge mortgage debt in bankruptcy.