II 

117TH CONGRESS 

1ST SESSION S. 2598 

To amend title 11, United States Code, to improve the treatment of student 

loans in bankruptcy, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 4, 2021 

Mr. DURBIN (for himself and Mr. CORNYN) introduced the following bill; 

which was read twice and referred to the Committee on the Judiciary 

A BILL 

To amend title 11, United States Code, to improve the 

treatment of student loans in bankruptcy, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fostering Responsible 

5 Education Starts with Helping Students Through Ac6 countability, Relief, and Taxpayer Protection Through 

7 Bankruptcy Act of 2021’’ or the ‘‘FRESH START 

8 Through Bankruptcy Act’’. 


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1 SEC. 2. EXCEPTIONS TO DISCHARGE. 

2 Section 523(a) of title 11, United States code, is 

3 amended by striking paragraph (8) and inserting the fol4 lowing: 

5 ‘‘(8) for an educational benefit overpayment or 

6 loan made, insured, or guaranteed by a govern7 mental unit, or made under any program funded in 

8 whole or in part by a governmental unit or nonprofit 

9 institution, or for an obligation to repay funds re10 ceived as an educational benefit, scholarship, or sti11 pend received from a governmental unit or nonprofit 

12 institution, unless— 

13 ‘‘(A) excepting such debt from discharge 

14 under this paragraph would impose an undue 

15 hardship on the debtor and the debtor’s de16 pendents; or 

17 ‘‘(B) the first payment on such debt be18 came due before the 10-year period (exclusive of 

19 any applicable suspension of the repayment pe20 riod) ending on the date of the filing of the pe21 tition; 

22 ‘‘(8A) unless excepting such debt from dis23 charge under this paragraph would impose an undue 

24 hardship on the debtor and the debtor’s dependents, 

25 for— 


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1 ‘‘(A) an obligation to repay funds received 

2 as an educational benefit, scholarship, or sti3 pend, other than an obligation described in 

4 paragraph (8); or 

5 ‘‘(B) any educational loan, other than a 

6 loan described in paragraph (8), that is a quali7 fied education loan, as defined in section 

8 221(d)(1) of the Internal Revenue Code of 

9 1986, incurred by a debtor who is an indi10 vidual;’’. 

11 SEC. 3. EFFECT OF DISCHARGE OF CERTAIN STUDENT 

12 LOANS. 

13 Section 524 of title 11, United States Code, is 

14 amended by adding at the end the following: 

15 ‘‘(n)(1) In this subsection: 

16 ‘‘(A) The term ‘cohort repayment rate’, with re17 spect to a covered institution of higher education, 

18 means the percentage of student borrowers who are 

19 making at least some progress paying down their 

20 student loans within 3 years of entering repayment. 

21 ‘‘(B) The term ‘covered institution of higher 

22 education’ means an institution of higher education 

23 (as defined in section 102 of the Higher Education 

24 Act of 1965 (20 U.SC. 1002)) that— 


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1 ‘‘(i) is a participant in the Federal Direct 

2 Loan Program under part D of title IV of the 

3 Higher Education Act of 1965 (20 U.S.C. 

4 1087a et seq.); and 

5 ‘‘(ii) has an enrollment of students that is 

6 not less than 33 percent students who have re7 ceived a loan made, insured, or guaranteed 

8 under title IV of the Higher Education Act of 

9 1965 (20 U.S.C. 1070 et seq.)). 

10 ‘‘(C) The term ‘covered student loan’ means the 

11 original principal of a loan— 

12 ‘‘(i) the first payment on which became 

13 due before the 10-year period (exclusive of any 

14 applicable suspension of the repayment period) 

15 ending on the date of the filing of the petition; 

16 and 

17 ‘‘(ii) used by the debtor to make a pay18 ment to a covered institution of higher edu19 cation on behalf of the debtor for the purpose 

20 of attaining an educational benefit. 

21 ‘‘(D) The term ‘Federal Direct PLUS Loan’ 

22 means a Federal Direct PLUS Loan under part D 

23 of title IV of the Higher Education Act of 1965 (20 

24 U.S.C. 1087a et seq.) 


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1 ‘‘(2) If a covered student loan is discharged in a 

2 bankruptcy case under this title, the covered institution 

3 of higher education to which the debtor of the bankruptcy 

4 case made a payment with the covered student loan shall 

5 pay to the Department of Education an amount deter6 mined in accordance with the following: 

7 ‘‘(A) An amount equal to 50 percent of the 

8 amount of the covered student loan that is dis9 charged, if the covered institution of higher edu10 cation, on the date on which the first payment on 

11 the covered student loan became due— 

12 ‘‘(i) had a cohort default rate (as deter13 mined under section 435(m) of the Higher Edu14 cation Act of 1965 (20 U.S.C. 1085(m)) for 

15 each of the 3 fiscal years preceding that date 

16 that was equal to or more than 25 percent; and 

17 ‘‘(ii) had a cohort repayment rate— 

18 ‘‘(I) except for borrowers described in 

19 subclause (II), that was equal to or less 

20 than 20 percent; and 

21 ‘‘(II) with respect to borrowers who 

22 were graduate or professional students who 

23 received a Federal Direct PLUS Loan for 

24 enrollment at the institution, that was 

25 equal to or less than 35 percent. 


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1 ‘‘(B) An amount equal to 30 percent of the 

2 amount of the covered student loan that is dis3 charged, if the covered institution of higher edu4 cation, on the date on which the first payment on 

5 the covered student loan became due— 

6 ‘‘(i) had a cohort default rate (as deter7 mined under section 435(m) of the Higher Edu8 cation Act of 1965 (20 U.S.C. 1085(m)) for 

9 each of the 3 fiscal years preceding that date 

10 that was equal to or more than 20 percent and 

11 less than 25 percent; and 

12 ‘‘(ii) had a cohort repayment rate— 

13 ‘‘(I) except for borrowers described in 

14 subclause (II), that was equal to or less 

15 than 25 percent and more than 20 percent; 

16 and 

17 ‘‘(II) with respect to borrowers who 

18 were graduate or professional students who 

19 received a Federal Direct PLUS Loan for 

20 enrollment at the institution, that was 

21 equal to or less than 40 percent and more 

22 than 35 percent. 

23 ‘‘(C) An amount equal to 20 percent of the 

24 amount of the covered student loan that is dis25 charged, if the covered institution of higher eduVerDate Sep 11 2014 05:19 Aug 05, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2598.IS S2598

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1 cation, on the date on which the first payment on 

2 the covered student loan became due— 

3 ‘‘(i) had a cohort default rate (as deter4 mined under section 435(m) of the Higher Edu5 cation Act of 1965 (20 U.S.C. 1085(m)) for 

6 each of the 3 fiscal years preceding that date 

7 that was equal to or more than 15 percent and 

8 less than 20 percent; and 

9 ‘‘(ii) had a cohort repayment rate— 

10 ‘‘(I) except for borrowers described in 

11 subclause (II), that was equal to or less 

12 than 30 percent and more than 25 percent; 

13 and 

14 ‘‘(II) with respect to borrowers who 

15 were graduate or professional students who 

16 received a Federal Direct PLUS Loan for 

17 enrollment at the institution, that was 

18 equal to or less than 45 percent and more 

19 than 40 percent.’’. 

20 SEC. 4. EFFECTIVE DATE; APPLICABILITY. 

21 This Act and the amendments made by this Act 

22 shall— 

23 (1) take effect on the date that is 180 days 

24 after the date of enactment of this Act; and 


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1 (2) apply to a petition filed or amended under 

2 this title on or after the effective date under para3 graph (1) with respect to a debt for an educational 

4 benefit, overpayment, loan, scholarship, or stipend of 

5 a debtor. 

Æ 


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