Did Joe Biden Vote for a Bankruptcy Bill Which Made Student Loans ‘Ineligible for Financial Relief’?

A March 5 2020 r/SandersForPresident (and r/all) thread featured a title maintaining that Democratic Party presidential candidate Joe Biden “passed the bill” making student loans “ineligible for financial relief,” and an attached ten-second clip featured fellow presidential Bernie Sanders making a similar statement:

That thread had a long title: “Joe Biden passed the bill that made student loans ineligible for financial relief. Joe Biden is the reason so many of us don’t have families yet. Joe Biden is why we can’t afford houses. Joe Biden is why we’re working longer hours for lower wages.”

By contrast, in the ten-second video, Sanders said:

Joe Biden voted for a bankruptcy bill, on behalf of the credit card companies, and that bill has done a lot of harm to working families all over this country … I voted against it.

A difference in wording between the title and the clip was important — the original poster stated Biden “passed the bill,” while Sanders stated that Biden had “voted for a bankruptcy bill.” Here, we are examining whether Biden voted for a bankruptcy bill with the described features, as Biden himself was not empowered to “pass” a bill — presumably the submitter was echoing Sanders’ claims in the clip.

The snippet originated from a longer interview with Sanders conducted by MSNBC’s Rachel Maddow on March 4 2020. Although MSNBC curated short clips from the interview, none was specifically labeled as having to do with Sanders’ claim about Biden and the bankruptcy bill. (We were unable to find a transcript.)

In the clip we transcribed above, Sanders didn’t mention a specific bill. However, it wasn’t difficult to narrow down specific legislation due to the prominence of student debt as an issue in the 2020 primary.

In December 2019, The Guardian published an article with a headline (“How Biden helped create the student debt problem he now promises to fix”) making claims similar to those made by Sanders in the brief video shared to Reddit. With a subheading claiming that the “former vice-president and 2020 presidential hopeful backed a 2005 bill that stripped students of bankruptcy protections and left millions in financial stress,” it reported in part:

In [February 2020] Joe Biden will lay “Joe’s vision for America” at the feet of Iowa’s caucus-goers in the hope that the first voters in the Democratic presidential race will put him on the road to the White House.

Among his promises is that he will fix the student loan crisis saddling 45 million Americans with crippling debt now totalling a staggering $1.5tn … [Biden’s] pledge is one of the most striking policies on offer from Democratic candidates in the 2020 race, given how the problem Biden now proposes to resolve came about in the first place. Private student loans were largely stripped of bankruptcy protections in 2005 in a congressional move that had the devastating impact of tripling such debt over a decade and locking in millions of Americans to years of grueling repayments.

The Republican-led bill tightened the bankruptcy code, unleashing a huge giveaway to lenders at the expense of indebted student borrowers. At the time it faced vociferous opposition from 25 Democrats in the US Senate.

But it passed anyway, with 18 Democratic senators breaking ranks and casting their vote in favor of the bill. Of those 18, one politician stood out as an especially enthusiastic champion of the credit companies who, as it happens, had given him hundreds of thousands of dollars in campaign contributions – Joe Biden.

The Guardian quoted University of North Carolina at Chapel Hill law professor Melissa Jacoby on Biden’s role in the bill’s passage:

Biden was one of the most powerful people who could have said no, who could have changed this. Instead he used his leadership role to limit the ability of other Democrats who had concerns and who wanted the bill softened[.]

In January 2020, TheIntercept.com covered the origins and progression of student loan debt in the United States, up to and including its prevalence in Democratic primary debates and platforms.

… as a senator from Delaware, Biden was one of the most enthusiastic supporters of the disastrous 2005 bankruptcy bill that made it nearly impossible for borrowers to reduce their student loan debt. The Bankruptcy Abuse Prevention and Consumer Protection Act raised the bar for families to pursue Chapter 7 bankruptcy protections. It overwhelmingly passed in the Senate at the end of the Clinton administration, over the objections of [Elizabeth] Warren, then a bankruptcy expert who had tangled for years with Biden over the issue. She lobbied first lady Hillary Clinton, who herself persuaded Bill Clinton to veto it.

Biden came back to the legislation under the Bush administration; it passed the Senate in 2005 on a 74-25 vote, with most Democratic lawmakers, including then-Sen. Barack Obama, voting against it. ([Hillary] Clinton, by then a senator from New York, voted for it.) George W. Bush signed it into law, and private student loan debt skyrocketed in the wake of its passage. The total amount of private student loan debt more than doubled between 2005 and 2011, growing from $55.9 billion to $140.2 billion, according to the Consumer Financial Protection Bureau.

In February 2020, RealClearPolitics examined Biden’s 2020 campaign stance on student debt, and contrasted it with his support in the early 2000s for more restrictions on student borrowers:

Biden’s student-loan plan represents a radical departure from positions he held during bankruptcy-law negotiations in the early 2000s. Then a senator from Delaware, he forcefully backed measures that made it much harder for private student-loan borrowers filing for bankruptcy to shed that debt. Representing many of the big financial institutions based in his home state, Biden was such a reliable advocate for the financial services industry that he was often referred to as “the senator from MBNA,” the credit-card company that regularly doled out contributions to his campaigns.

In promoting a 2005 bankruptcy reform measure, Biden argued that too many people were skipping out of their debts too easily and sticking other borrowers with the bill while interest rates rose as a result… A bankruptcy court judge also testifying [the same day as Biden] took issue with Biden’s stance, arguing that government-backed student loans aren’t dischargeable – something that has remained the case since then, as well.

“You would never be able to [discharge government-backed student loans like] that,” Judge Randall Newsome said.

“Like heck you can’t,” Biden countered. “…You are full of malarkey, judge.”

Newsome was just one of the many opponents of the bill whom Biden sparred with at the time. Elizabeth Warren, then a Harvard law professor, opposed the bankruptcy bill so aggressively that she says it inspired her to run for the Senate.

“I got in that fight because [families] just didn’t have anyone, and Joe Biden was on the side of the credit card companies,” Warren said at an April rally in Iowa. “It’s all a matter of public record.”

As Newsome noted, discharging government-backed student loans is, and has always been, nearly impossible. However, the 2005 bill was described as involving private student loan debt, not debt held by the federal government.

In January 2020,  the American Prospect reported that Biden had voted several times against “softening” the effects of that bill (abbreviated as BAPCPA) on myriad demographics hardest hit by its provisions:

Biden also consistently voted against efforts to soften BAPCPA’s blow on vulnerable populations. He voted against three amendments to ease bankruptcy requirements for consumers whose financial troubles stem from medical expenses. He voted against an amendment that would have helped seniors keep their homes. He voted against exempting servicemembers and widows of servicemembers killed in action from the law’s eligibility restrictions. He voted against an amendment to exempt women whose financial troubles stemmed from deadbeat husbands’ failure to pay child support or alimony. And Biden even voted against an amendment that would have ensured that children of debtors could still be given birthday and Christmas presents. Biden also voted against allowing debtors to pay their union dues during bankruptcy, potentially imperiling their employment and ability to achieve financial rehabilitation.

In excerpts above, the bill Biden was often accused of supporting was referenced by its name — the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Text of the bill was available on Congress.gov, and Section 220 of the bill declared both private and federal student debt exempt from being discharged in bankruptcy. A summary of all of the bill’s points can be viewed here.

In the clip, Sanders made two claims about voting on the bill, stating that Biden voted for it, and that he — Sanders — had voted against it. According to Senate.gov, Biden voted in favor of the bill in the Senate on March 10 2005. Per GovTrack.us, Sanders (then in the House of Representatives) did vote against the same bill on April 14 2005.

On Reddit, a post to r/SandersForPresident misstated Sanders’ statement on the 2005 bankruptcy bill making it virtually impossible to discharge private student debt. Sanders said that Biden “voted for a bankruptcy bill, on behalf of the credit card companies, and that bill has done a lot of harm to working families all over this country … I voted against it.” Sanders was correct — Biden was among the few Democrats voting in favor of that 2005 bill in the Senate, and when it came around to the House the following month, Sanders voted against it.