Education Dept. Eyes Changes in Bankrupt Borrowers’ Ability to Discharge Loans

Clare McCann was quoted in the Chronicle of Higher Education on allowing bankrupt borrowers to discharge their loans:

It is probably true that the government “spends too much money chasing after debt that they’ll never collect on, and letting people who are never going to repay those debts discharge them in bankruptcy can be win-win for both the agency and for those borrowers,” said Clare McCann, deputy director for federal higher-education policy at New America. “On the other hand, given the huge number of benefits that exist, you don’t want the undue-hardship standard to be too broad.”

One of those benefits, she said, is income-based repayment, which allows borrowers to repay their loans for a certain period of time based on their income.