Discharging Student Loans in Bankruptcy

The Myth: "Student Loans Can Never Be Discharged"

For decades, conventional wisdom said student loans can never be discharged in bankruptcy. That belief was so widespread that many borrowers never even tried, and many attorneys discouraged the attempt as hopeless. The reality is more nuanced: student loans are not automatically wiped out the way credit card debt is, but they have always been dischargeable in the right circumstances. The law that governs them — 11 U.S.C. §523(a)(8) — makes student loans presumptively nondischargeable unless the borrower proves that repaying them would impose an "undue hardship." For years, the difficulty of meeting that standard, combined with the cost and complexity of the process, made discharge feel out of reach. That landscape has shifted.

The November 2022 DOJ and Education Department Attestation Process

On November 17, 2022, the U.S. Department of Justice, in coordination with the U.S. Department of Education, issued new guidance that created a clear, streamlined process for evaluating student-loan discharge requests in bankruptcy (justice.gov). At the center of the process is a sworn attestation form that the borrower completes, disclosing income, assets, and expenses. Government attorneys then use a standardized framework to assess whether the borrower meets the undue-hardship standard — and, where the facts support it, to recommend or stipulate to discharge rather than fight it. The current attestation form is published by the DOJ (justice.gov/d9/2024-05/StudentLoanAttestationFillableForm.pdf). This guidance applies to federal student loans held or guaranteed by the Department of Education.

It is important to understand the limit of this guidance: it is internal DOJ guidance and does not bind the bankruptcy courts. A judge still has to find undue hardship and enter the discharge. But because the government is the opposing party in these cases, a process under which government attorneys agree to recommend discharge when the criteria are met removes much of the adversarial friction that previously made these cases so hard to win.

What the Numbers Show

According to studentaid.gov, courts granted full or partial discharge in approximately 98% of cases decided under the new process between November 2022 and March 2024. That figure describes outcomes that courts reached during a specific window — it is not a prediction or a promise about any individual case. No outcome is guaranteed; whether your loans can be discharged depends on your facts and a court's decision. The high rate reflects, in part, that borrowers and attorneys who pursue this process tend to bring cases that fit the undue-hardship criteria. The takeaway is not "everyone wins" — it is that the door, long believed shut, is demonstrably open for borrowers whose circumstances qualify.

The Legal Standard: §523(a)(8) Undue Hardship and the Brunner Test

Under 11 U.S.C. §523(a)(8), educational loans are not discharged unless excepting them would cause an "undue hardship" on the debtor and the debtor's dependents. Congress did not define "undue hardship," so the courts developed tests. Most federal circuits apply the three-prong Brunner test, named for the 1987 case Brunner v. New York State Higher Education Services Corp.

Prong one — present inability: based on current income and expenses, the borrower cannot maintain a minimal standard of living for themselves and their dependents if forced to repay the loans. Prong two — persistence: this state of affairs is likely to persist for a significant portion of the repayment period. Prong three — good faith: the borrower has made good-faith efforts to repay the loans (for example, by making payments when able or attempting income-driven repayment). A borrower generally must satisfy all three prongs. Several circuits — including those that have criticized Brunner as too harsh — instead use a "totality of the circumstances" standard that weighs the borrower's overall financial picture rather than rigid prongs.

The Adversary Proceeding

Discharging student loans is not automatic when you file for bankruptcy. You must affirmatively ask the court to discharge them by filing a separate lawsuit within your bankruptcy case called an adversary proceeding. This is governed by the Federal Rules of Bankruptcy Procedure, and under FRBP 4007(b) the request to determine dischargeability of student loans can be brought at any time — there is no separate filing fee for this type of adversary proceeding. In the proceeding, you name the loan holder (and, for federal loans, the Department of Education) as the defendant, present evidence of your finances, and ask the court to find undue hardship. The November 2022 attestation process is designed to be used within this adversary proceeding.

Federal vs. Private Student Loans

The distinction between federal and private loans matters enormously. Federal student loans require the undue-hardship adversary proceeding described above. Private student loans, however, are different. Many private loans — particularly those that were not "qualified education loans" or that exceeded the cost of attendance — are treated as general unsecured debt, dischargeable in bankruptcy without proving undue hardship at all (studentaid.gov; CFPB). This is a critical and underappreciated point: a borrower carrying both federal and private debt may face two very different paths, and private loans that everyone assumed were nondischargeable may in fact be wiped out like any other unsecured debt.

Trade-Offs and What to Expect

Bankruptcy is a serious legal step with real consequences. A bankruptcy filing appears on your credit report and can affect your access to credit for years. The adversary proceeding adds litigation on top of the underlying bankruptcy. These consequences should be weighed honestly against the benefit of discharging burdensome debt — and against alternatives such as income-driven repayment or, for those who qualify, federal forgiveness programs. The right path depends on your full financial picture and the type of loans you carry.

Where the Attestation Process Came From — and What It Replaced

To appreciate how much changed in 2022, it helps to understand what came before. Historically, when a borrower filed an adversary proceeding to discharge federal loans, the government's lawyers — the U.S. Department of Justice, representing the Department of Education — routinely contested it. Borrowers often had to litigate every element of the undue-hardship standard against a well-resourced opponent, frequently without their own attorney because the expected cost exceeded the perceived chance of success. The November 17, 2022 guidance flipped that dynamic by giving government attorneys a clear, consistent framework: when a borrower's sworn attestation shows that the criteria are met, the government can affirmatively recommend discharge instead of fighting it (justice.gov). The framework draws on objective benchmarks — standardized expense allowances and similar measures — so that similarly situated borrowers are treated consistently rather than at the mercy of which government attorney happened to be assigned.

Chapter 7 or Chapter 13 — Either Can Host the Proceeding

A student-loan discharge proceeding lives inside an underlying bankruptcy case, and that case can be either a Chapter 7 (liquidation) or a Chapter 13 (repayment plan). Many borrowers pursue the adversary proceeding within a Chapter 7, where qualifying unsecured debts are discharged and the case concludes relatively quickly. Others are in a Chapter 13, where the loans are addressed alongside a multi-year repayment plan. The choice of chapter depends on your income, assets, and broader financial goals, and it is one of the first things a bankruptcy attorney will assess. Whichever chapter applies, the student-loan piece still requires the separate adversary proceeding and the undue-hardship showing — bankruptcy alone does not reach the loans automatically.

How People's Justice Helps

People's Justice is not a law firm and does not provide legal advice; we connect you with licensed attorneys, and we are not a government agency. Evaluating whether your student loans can be discharged — federal or private, Brunner or totality — requires a lawyer who can review your specific income, expenses, loan types, and circuit. If you have been told your student loans can never be discharged, that advice is outdated. The honest answer is that it depends on your facts and a court's decision, and the only way to know is to have a qualified attorney evaluate your situation. No outcome is guaranteed, but the path that conventional wisdom said was closed is, for the right borrower, demonstrably open.

Why the Old Conventional Wisdom Took Hold

The belief that student loans can never be discharged grew out of a combination of statutory changes and a small number of harsh appellate decisions. Over successive amendments, Congress made educational loans presumptively nondischargeable absent undue hardship, and eventually extended that treatment to certain private educational loans as well. Meanwhile, courts applying the Brunner test in its strictest form sometimes denied discharge even to borrowers in genuinely dire circumstances, producing headlines that reinforced the sense of futility. The cost of litigating an adversary proceeding, combined with the perception of near-certain loss, meant few borrowers tried — and the lack of attempts became self-fulfilling proof that it could not be done.

How the Attestation Form Works in Practice

Under the November 17, 2022 guidance (justice.gov), the borrower completes a sworn attestation form disclosing household income, assets, monthly expenses, and circumstances bearing on the ability to repay. Government attorneys compare the disclosed figures against objective benchmarks — for example, comparing expenses against IRS and other standardized allowances and assessing whether the borrower's situation is likely to persist and whether good-faith repayment efforts were made. Where the criteria are satisfied, the government can recommend a full or partial discharge to the court rather than contesting the case. Because the form standardizes the analysis, it reduces the uncertainty and expense that previously deterred borrowers and their counsel. The current form is at justice.gov/d9/2024-05/StudentLoanAttestationFillableForm.pdf.

Reading the ~98% Figure Honestly

studentaid.gov reports that courts granted full or partial discharge in approximately 98% of cases decided under the streamlined process between November 2022 and March 2024. Two cautions are essential. First, the figure is windowed and source-attributed: it describes a defined set of decided cases in a specific period, not a perpetual or guaranteed rate. Second, it reflects self-selection — the borrowers who reach a decision under this process are generally those whose facts fit the undue-hardship criteria and who had counsel willing to bring the case. A borrower whose income comfortably covers loan payments would not expect this result. The correct framing is always the same: no outcome is guaranteed; whether your loans can be discharged depends on your facts and a court's decision.

Partial Discharge and Other Outcomes

Discharge is not all-or-nothing. Courts can grant a partial discharge — eliminating a portion of the loan balance while leaving the rest — or restructure the obligation in light of the borrower's ability to pay. This is why studentaid.gov reports the rate as "full or partial" discharge. For a borrower with some capacity to repay but a balance that is genuinely unmanageable, a partial discharge can be a meaningful result even if a full discharge is not available. An attorney can advise on which outcome your circumstances may support.