Private Student Loan Bankruptcy Fairness Act of 2025
Private Student Loan Bankruptcy Fairness Act of 2025 would change how certain educational debts are treated in bankruptcy by revising 11 U.S.C. § 523(a)(8). The bill eliminates subparagraph (B) of that section and reworks the language of subparagraph (A), notably altering how loans tied to educational programs funded by government units or similar entities are classified for discharge. The overall effect is to modify which education-related debts qualify for non-dischargeability, with the changes taking effect on enactment and applying only to bankruptcy cases commenced after enactment. In practice, this could broaden or reshape the discharge options for some private student loans and other education-related debts going forward, depending on how the reorganized provisions are interpreted in court.
Key Points
- 1Short title: The act is named the Private Student Loan Bankruptcy Fairness Act of 2025.
- 2Core change to discharge rules: Section 523(a)(8) is amended by striking subparagraph (B) entirely.
- 3Rewriting of subparagraph (A): The clause structure is altered:
- 4- In clause (i), the text after “unit or” would insert the phrase “any program for which substantially all of the funds are provided by a” (as written in the bill’s text).
- 5- In clause (ii), the numbering is changed (subparagraph (ii) is replaced with “B”), and the final “or” is removed.
- 6Effective date and application: The act takes effect on enactment, but its amendments apply only to bankruptcy cases commenced on or after the date of enactment.
- 7Scope: The changes relate specifically to the treatment of educational loans in dischargeability determinations under Chapter 7/11/13 (as applicable), with a focus on programs funded in substantial part by governmental units or related sources.