Howard Metzenbaum: “the Bankruptcy Code, section 525, prohibits governmental units from discriminating against a person because of a prior…”

“the Bankruptcy Code, section 525, prohibits governmental units from discriminating against a person because of a prior bankruptcy or discharge of a debt. Specifically, the code provides that a governmental unit may not discriminate in cases of a ``license, permit, charter, franchise, or other similar grant'' because of a prior bankruptcy. Some courts have construed this provision very narrowly. For example, if a person has filed for bankruptcy and later applies for a Government-sponsored student loan, some courts have upheld the denial of the loan because the Bankruptcy Code does not specifically mention student loans as a category in which the Government may not discriminate. This interpretation seriously undermines the fresh start that section 525 was meant to ensure. It also may prevent a person from going back to school. The Metzenbaum amendment would specifically list student grants and/ or loans as an area in which the Government may not discriminate. Under current law, most student loans cannot be discharged in bankruptcy. This amendment will not change that law.”