Can You File Bankruptcy on Student Loans?
Student loans are widely believed to be impossible to discharge in bankruptcy, and that belief is outdated. It is harder than discharging credit card debt, but a real and increasingly used path exists. Here is what the standard actually requires and how the process has changed.
The undue hardship standard
Student loans are not automatically discharged along with your other debts. To discharge them, you have to file a separate lawsuit within your bankruptcy case, called an adversary proceeding, and prove that repaying the loans would impose an “undue hardship” on you and your dependents. Most courts apply some version of the Brunner test, which asks three things: whether you can maintain a minimal standard of living for yourself and your dependents if forced to repay the loans, whether additional circumstances indicate this financial situation is likely to persist for a significant portion of the repayment period, and whether you made good-faith efforts to repay the loans before filing, such as attempting income-driven repayment or deferment. Some circuits use a “totality of the circumstances” test instead, which is generally considered more flexible.
Why this got easier in recent years
In November 2022, the Department of Justice and the Department of Education issued new guidance instructing government attorneys to use a standardized attestation form when evaluating undue hardship claims for federal student loans. The form asks about your income, expenses, health, disability status, age, and employment history, and DOJ attorneys are directed to recommend a partial or full discharge when the borrower’s answers meet defined thresholds — for example, when household income is below 100% of the federal poverty guidelines with little prospect of significant improvement. This does not guarantee discharge and does not bind the bankruptcy judge, but it has meaningfully increased both the number of borrowers willing to file adversary proceedings and the rate at which the government consents to discharge rather than litigating.
Federal loans vs. private loans
The undue hardship standard applies to both federal and private student loans, but the practical experience differs. The Department of Education, through its Office of the General Counsel, now has a defined internal process for evaluating these attestation forms. Private loan servicers have no equivalent policy and typically contest discharge more aggressively, though courts apply the same legal standard to both.
What the process actually looks like
Discharging student loan debt requires these general steps: first, you file for Chapter 7 or Chapter 13 bankruptcy as normal. Separately, you or your attorney file an adversary complaint against each loan holder, which functions like its own lawsuit inside the bankruptcy case. For federal loans, you typically complete the attestation form as part of this process. The loan holder can respond by consenting to some or full discharge, or by contesting the claim, in which case the matter proceeds to discovery and potentially trial before a bankruptcy judge. Because this is genuinely a separate lawsuit with its own procedural rules, it is one of the areas of bankruptcy law where hiring an attorney experienced in student loan adversary proceedings is worth strongly considering, even if you plan to handle the rest of your filing yourself.
Alternatives if discharge doesn’t apply to you
If your circumstances don’t support an undue hardship claim, other options exist outside bankruptcy: income-driven repayment plans cap federal loan payments at a percentage of discretionary income and forgive remaining balances after 20-25 years; Public Service Loan Forgiveness discharges federal loans after 120 qualifying payments while working for a government or qualifying nonprofit employer; and Total and Permanent Disability discharge is available for borrowers who meet SSA or VA disability criteria. These programs are administered by the Department of Education directly and don’t require bankruptcy at all.
The bottom line
Student loan discharge in bankruptcy is no longer the near-impossible standard it was treated as for decades, but it still requires filing a separate adversary proceeding and meeting a real evidentiary bar. If a significant share of your debt is student loans, talk to a bankruptcy attorney about whether your specific financial and health circumstances would support an undue hardship claim before assuming discharge is off the table.
