Collins statement on bankruptcy hearing

"The price of going to college should not be going into bankruptcy."

WASHINGTON — Rep. Doug Collins (R-Ga.), Ranking Member of the House Judiciary Committee, gave the following opening statement at today's subcommittee hearing on bankruptcy. Below are the remarks as prepared. Ranking Member Collins: Thank you, Chairman Cicilline and Ranking Member Sensenbrenner, for holding this hearing. The bankruptcy system is a critical component of our economy. It provides an important safety net for entrepreneurs and households when they need a fresh start. It also stabilizes and encourages lending, because it is a tried and true way for creditors to recover as much as feasible when things go wrong for borrowers. I particularly applaud the subcommittee for considering today the Small Business Reorganization Act. This important bill, recently reintroduced by Representative Cline and Subcommittee Chairman Cicilline, offers long-needed reform of chapter 11 of the Bankruptcy Code to help small businesses. Chapter 11 has for many years been the key to survival for firms that need to reorganize their debts so they can continue in business. Reorganization preserves jobs, investments and valuable contributors to our economy, but, for just as many years, chapter 11’s terms have been poorly suited to allow small businesses and their creditors to take full advantage of the relief it promises. To solve this problem, the bill takes as a model for small businesses the provisions of chapter 12 that help small family farmers to reorganize their farming enterprises when needed. Chapter 12 has long worked well for family farmers. Weaving terms modeled on it into chapter 11 for general use in small business cases is a terrific idea. I was proud to have introduced the Small Business Reorganization Act last term with Subcommittee Chairman Cicilline, and I am proud to be an original cosponsor of it this term. This bill promises to finally make chapter 11 work for the entrepreneurs whose small businesses form the backbone of job creation and communities across our nation. We also consider today several other bills. Respectively, they offer more flexibility in bankruptcy for service members and their families, an increase in the amount of debt that can be reorganized in chapter 12 bankruptcies and increased transparency concerning firms helping to resolve Puerto Rico’s insolvency under the 114th Congress’ PROMESA legislation. I am glad that we have a chance to examine these bills today. We also consider today Chairman Nadler’s proposed legislation to expand vastly the amount of student loan debts that can be discharged in bankruptcy. Like many members, I am deeply troubled by the skyrocketing costs of higher education and the massive amounts of debt students are taking on to shoulder those costs. To best help students, Congress must find ways to stop the explosion of costs. Congress’ answer to students should not be, "sorry, we’re unwilling to drive down costs, but we will make it easier for you to end up in bankruptcy court." The answer needs to be about the costs themselves and the institutions. The price of going to college should not be going into bankruptcy. Also, since the vast majority of student loans are now federal loans, our answer to taxpayers shouldn’t be that, in response to unbearable student loan levels, all Congress can do is increase the ways in which taxpayers get left holding the bag. That is exactly what happens when federal student loans are discharged in bankruptcy cases. Wouldn’t it be a fairer solution for colleges and universities to put more skin in the game? Many universities have multi-billion-dollar endowments. Why shouldn’t those endowments take the hit for wildly high tuition and fees before the taxpayers have to? There are other options we must consider before allowing bankruptcy to turn into taxpayer-funded scholarships. I will certainly help to consider Chairman Nadler’s proposal, but I also ask all of my colleagues to join with me in the search for ways to drive higher education costs down to bearable levels.