Advocacy Organizations Ask Education Department to Stop Opposing Student Debtors in Bankruptcy Court

A coalition of 17 advocacy organizations called on Education Secretary Miguel Cardona to immediately withdraw his department's opposition to student borrowers seeking to discharge their debt in bankruptcy court while the Department reviews its bankruptcy policies in a letter on Thursday. The letter can be read here.

The letter comes amidst intensified scrutiny of the Education Department's bankruptcy policies. On January 28th, the Department moved to appeal a bankruptcy court's decision to discharge the nearly $100,000 in student loan debt held by Ryan Wolfson, a 35-year-old epileptic and chronically underemployed man, as The Daily Poster wrote on February 2. The appeal had the potential to undermine even this rare recourse for overburdened student debtors to seek relief in bankruptcy court. It stands in direct opposition to Biden's promise to make discharging student debt through bankruptcy easier.

Two days after The Daily Poster broke the story, the Education Department informed the outlet that they would be withdrawing the appeal, and "review[ing] how we handle future claims." Six days after this reversal, however, the Department appealed yet another case: that of Monique Wheat. Following backlash on Thursday, the Education Department subsequently dropped this appeal as well.

The coalition's letter calls on the Education Department to immediately cease its practice of opposing borrowers seeking student debt discharge in the bankruptcy process -- in every open case. The letter states: "The Department's persistent opposition to student borrowers in bankruptcy cases is not the only element of the Department's bankruptcy policy to which we take issue, but withdrawing those oppositions is an immediate actionable step the Department can take to indicate that it is reviewing its bankruptcy policy in good faith, with an eye towards substantial reform."

Bankruptcy court allows the students who struggle most with student loan repayment a chance to relieve themselves of debt. The Education Department should not spend its scarce time and resources opposing these struggling individuals. We hope to see the Education Department's review of its bankruptcy policies lead to a new approach to federal student debt that advances economic justice and racial equity, and makes a material positive impact in the lives of American graduates.