Are Student Loans Dischargeable in Bankruptcy?

Student loans can be discharged in bankruptcy, but they don’t fall away automatically the way credit card balances or medical bills do. To wipe out student loan debt in bankruptcy, you have to file a separate lawsuit inside your bankruptcy case and convince a judge that repaying the loans would cause you “undue hardship.” That standard is deliberately demanding, though changes to how the federal government handles these cases since 2022 have made success far more realistic. A 2025 study found borrowers who actually pursued discharge succeeded about 87% of the time, up from around 40% in 2007.

What “Undue Hardship” Means

Federal bankruptcy law treats student loans as one of the few debts that survive bankruptcy by default. Under 11 U.S.C. § 523(a)(8), education loans made or guaranteed by a government entity, obligations to repay educational benefits like scholarships, and private “qualified education loans” are all excluded from the standard discharge unless you can prove undue hardship.¹

The statute never defines the phrase, so federal courts have built their own tests. Which one applies depends on where you file.

The Brunner Test

Most federal appellate circuits use a three-part framework from a 1987 Second Circuit case, Brunner v. New York State Higher Education Services Corp.² You have to prove all three:

You cannot maintain a minimal standard of living for yourself and your dependents if forced to repay. Courts look closely at whether you’re earning what you reasonably can and holding expenses down. Turning down higher-paying work or spending on non-essentials undercuts this prong.
Your financial situation is likely to persist for a significant portion of the repayment period. Permanent disability, chronic illness, advanced age, or training in a field with no realistic job prospects are the strongest facts here. A recent layoff, on its own, usually isn’t enough.
You made good faith efforts to repay. Judges want to see payments when you could make them, contact with your servicer, and attempts at income-driven repayment. Skipping an income-driven plan is one of the fastest ways to lose this prong, though no statute requires enrollment before filing and appellate courts have held that the mere availability of these plans doesn’t automatically block discharge.

The Totality of the Circumstances Test

The Eighth Circuit rejected Brunner and weighs the borrower’s situation as a whole: income, expenses, dependents, health, age, employment prospects, and anything else affecting ability to repay. The First Circuit has never formally adopted either test, but most bankruptcy courts within it apply this broader approach as well. The evidence looks similar, but the analysis is less rigid, and a borrower who falls slightly short on one Brunner prong may still get relief.

Private Loans Are a Separate Question

Not every private student loan gets the same protection as a federal one. Section 523(a)(8) shields two categories: loans made or guaranteed by the government, and private loans that meet the Internal Revenue Code’s definition of a “qualified education loan.” A qualified education loan is one taken out solely to pay for higher education expenses at an eligible institution, within that school’s cost of attendance.¹

Private loans that fall outside that definition can be discharged like any other unsecured debt, with no undue hardship showing at all. A private loan might not qualify if it was used at a school ineligible for federal aid, if the lender sent funds directly to you rather than through the school, if the amount exceeded the school’s cost of attendance, or if the money went toward expenses unrelated to your degree program. Any of those facts opens a much easier path.

Even when a private loan does qualify for protection, the litigation dynamic differs. Private lenders pay their own legal costs and often prefer to settle, sometimes with reduced balances or modified terms, rather than fight through trial. The DOJ streamlined process described below applies only to federal loans held by the Department of Education. Private lenders are not part of it.³

How the Adversary Proceeding Works

You can pursue discharge in either Chapter 7 or Chapter 13. Either way, you file a separate lawsuit within your bankruptcy case called an adversary proceeding. It starts with a complaint asking the court to find that repaying your loans would impose undue hardship.

For federal loans, you serve the loan servicer, the U.S. Attorney’s Office for your district, and the Department of Justice.⁴ For private loans, you serve the lender. The defendant answers or moves to dismiss, and from there the case proceeds like any other lawsuit, with discovery, potential settlement talks, and a trial if the parties don’t resolve it earlier. Many cases now settle before trial.

The 2022 DOJ Process for Federal Loans

In November 2022, the Department of Justice, working with the Department of Education, issued guidance that changed how government attorneys handle these cases. Before it, DOJ lawyers contested nearly every discharge attempt. The new framework directs them to evaluate the borrower’s situation against criteria that largely track the Brunner Test and, when the facts support it, recommend discharge instead of litigating.³

The centerpiece is an attestation form the borrower completes. It collects household income, monthly expenses broken down by category (using IRS collection standards as benchmarks), loan and education history, any disabilities or chronic conditions, employment status, and repayment efforts. The Department of Education reviews its own records against the attestation, and if the facts support undue hardship, the government may agree to discharge without a trial.⁵

The guidance applies only to federal loans where the Department of Education is the creditor, including loans under the Federal Family Education Loan Program and the Federal Perkins Loan Program when held by the Department.⁶ As of early 2026, it remains listed as active on the DOJ’s website.⁴

Partial Discharge and Modified Terms

Judges aren’t limited to all-or-nothing. Several federal appellate courts have recognized the authority to grant partial discharge, wiping out some of the balance and leaving the rest. The DOJ guidance explicitly contemplates this: if you can afford some payments but not the full amount, the government may recommend reducing the balance to a level your income can realistically support over the remaining term.³

Courts and settlements can also modify loan terms rather than eliminating principal, by lowering interest rates or extending repayment periods. Private lenders in particular often prefer this route. For borrowers whose finances are difficult but not catastrophic, these outcomes are realistic and common.

What It Costs

The adversary proceeding filing fee is $350, but individual debtors in Chapter 7 or Chapter 13 have that fee waived entirely. The real cost is legal representation. Attorneys who handle student loan adversary proceedings typically charge anywhere from a few thousand dollars for straightforward cases to $20,000 or more for complex ones that go to trial. Some legal aid organizations take these cases for free, and the DOJ’s streamlined process has reduced litigation costs in federal cases that settle without a full trial. For a borrower with six figures of debt and strong hardship facts, the math usually works.

Evidence That Strengthens Your Case

Documentation often decides the outcome. Vague claims about financial difficulty rarely succeed; specific evidence tied to each element does.

For the minimal standard of living element:

Recent pay stubs, tax returns, benefit award letters, and bank statements covering all household income
A detailed monthly budget for housing, utilities, food, medical costs, transportation, and childcare, backed by receipts or bills
Birth certificates, custody orders, or other records establishing who depends on your income

For persistence of hardship:

Medical records documenting chronic conditions, disabilities, or mental health issues that limit earning capacity
Employment records showing job loss, underemployment, or an inability to find work in your field
Evidence of an incomplete degree, a shrinking field, or credentials that are no longer marketable
Documentation of your age and remaining career horizon if you’re near retirement

For good faith efforts:

Records of payments you made when you could, even sporadically
Emails, letters, or call logs showing contact with your loan servicer
Applications for or enrollment in income-driven repayment, deferment, or forbearance

Gathering this material before you file saves time and strengthens your position, especially under the DOJ’s streamlined process, where the attestation form asks for much of it upfront.

1
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
2
Justia. Brunner v. New York State Higher Education Services Corp
3
U.S. Department of Justice. Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation
4
U.S. Department of Justice. Student Loan Guidance
5
U.S. Department of Justice. Student Loan Attestation Form
6
Federal Student Aid. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings