Medical Bankruptcy Fairness Act

Democratic Senators, led by Senator Elizabeth Warren (D-MA) and Senator Raphael Warnock (D-GA), wrote a letter to Education Secretary Miguel Cardona, urging the Department of Education to take action. Noting that the CARES Act allows borrowers to rehabilitate their defaulted federal student loans without having to actually make any payments through September 30, the senators are encouraging Cardona to utilize emergency powers provided to the Secretary under the HEROES Act to automatically rehabilitate the millions of federal student loan borrowers who are currently in default.

We urge the Department to take swift action to assist student loan borrowers throughout this pandemic using every available statutory, regulatory, and administrative authority.

Given that all defaulted borrowers have satisfied the statutory requirements for rehabilitation, in accordance with the CARES Act the Department should automatically rehabilitate all 7.5 million federally-managed student loans without the need for application," the senators concluded.

Joining the letter are Senators Bernard Sanders (I-Vt.), Cory Booker (D-N.J.), Edward J. Markey (D-Mass.), Richard Durbin (D-Ill.), Chris Van Hollen (D-Md.), Brian Schatz (D-Hawaii), Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Tammy Duckworth (D-Ill.), and Tina Smith (D-Minn.)

[DISCLAIMER] n the end, this bill is just that — a bill — and current law on bankruptcy, student loans and medical debt still stands. This post is for educational purposes only and does not contain legal advice.



Pending legislation


Medical Bankruptcy Fairness Act of 2021

Effective timeline


American workers and individuals would find much financial relief if this bill is enacted, there is still much to deliberate in congress over how this bill will effect financial institutions with regard to outstanding debts, but relief maybe available through government subsidies to those institutions.

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