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Agencies will consider such factors as the person's current and future ability to pay, taking into account efforts to earn income or manage expenses.
"It's outrageous that other people get to declare bankruptcy but students can't," Sen. Chuck Schumer said in February.
Despite vowing to change the way student loans are treated in bankruptcy, the administration is still using its discretion to limit payouts.
The Biden administration admits bankruptcy laws for student loans are too strict, yet it's fought borrowers who had their debt forgiven in court.