Student Loans in Bankruptcy

Student loans are the debt bankruptcy is famous for not touching. That reputation is mostly earned, but it is out of date in one important way. Since late 2022, the federal government has followed a written process that tells its own lawyers when to agree that a borrower has shown undue hardship. Borrowers who use it have done far better than the old folklore suggests. The loans still do not go away on their own. Someone has to ask.

Key points

• The discharge order does not list student loans as discharged. Without an adversary proceeding, the loan survives and collection resumes when the case ends.
• "Undue hardship" is not defined in the statute. Most courts use the three-part Brunner test; the Eighth Circuit uses a totality-of-the-circumstances test.
• For federal loans, the DOJ and Department of Education guidance of November 17, 2022 replaced case-by-case litigation with a 15-page attestation and a checklist the government lawyer applies.
• The only official results DOJ has published: 632 adversary cases were filed in the first ten months, and in 99 percent of cases decided by then the court granted a full or partial discharge on the government's recommendation.
• Private loans are covered by §523(a)(8) only if they are "qualified education loans" under the tax code. Some private loans fall outside that definition and are treated like ordinary debt.

What the statute actually says

Two things follow from that text:

• The exception is the default. A borrower who files bankruptcy and does nothing else keeps the student loan. The loan servicer may pause collection during the case because of the automatic stay, and then resumes.
• The hardship finding is an affirmative request. It has to be made in an adversary proceeding. Under Bankruptcy Rule 7001, that is the procedure for any dispute about whether a debt is dischargeable. That means a complaint, a summons, a defendant, and a judge.

The two hardship tests courts use

The Bankruptcy Code never defines undue hardship, so appellate courts built tests.

The Brunner test comes from a 1987 Second Circuit case and is used by most circuits. The borrower has to show all three parts:

1. Cannot maintain a minimal standard of living

   Based on current income and expenses, paying the loan would push the borrower and dependents below a minimal standard of living.

2. The situation is likely to persist

   Additional circumstances suggest the inability to pay will continue for a significant part of the repayment period. Courts look at age, health, disability, dependents, and the realistic job market for the borrower's training.

3. Good-faith efforts to repay

   The borrower made real attempts to pay, explored income-driven plans and deferments, and did not run up the debt or dodge the lender.

The totality-of-the-circumstances test, used in the Eighth Circuit, asks the same underlying question without the rigid three-prong structure. It weighs past, present, and reasonably reliable future resources, reasonable living expenses, and any other relevant facts, and asks whether repayment would be an undue hardship.

Under either test, the pre-2022 problem was the same. The government fought nearly every case, the cases were expensive, and the results were unpredictable. Very few borrowers ever tried.

The DOJ process for federal loans (November 2022)

Details that matter in practice:

• Present inability to pay is measured against IRS Collection Financial Standards for expenses, not against whatever the borrower is actually spending. The attestation form was updated in May 2025 to reflect the annual change in those standards.
• Future inability is presumed in listed situations. They include being age 65 or older, having a disability or chronic injury that affects income, being unemployed for at least five of the last ten years, not having obtained the degree the loan paid for, and having been in repayment for at least ten years.
• Good faith looks at reasonable efforts: contacting the servicer, applying for income-driven repayment, and not having missed obvious options. It does not require that every possible program was tried.
• Partial discharge is allowed. The guidance lets the government agree that part of a loan is discharged and the rest repaid.
• It covers federal loans held by the Department of Education. Private loans are outside the guidance. Federally backed loans held by other entities may be handled differently.

The guidance, the fact sheet, the attestation form, and a sample scenario are on the U.S. Trustee Program's student loan guidance page, which was last updated March 17, 2026 as of this page's verification date.

What the results have been, honestly

The only official outcome data DOJ has published is a November 16, 2023 press release covering the first year. It reported that 632 adversary cases were filed in the first ten months of the process, November 2022 through September 2023. It said 97 percent of borrowers in those cases chose to use it. And in 99 percent of the cases where a court had entered an order by then, the government recommended and the court granted a full or partial discharge.

Three cautions belong next to those numbers:

• They describe borrowers who filed. A few hundred adversary cases is a small fraction of the millions of borrowers in bankruptcy-adjacent distress. The high success rate reflects self-selection as much as generosity.
• They are old. DOJ has not published a later official tally that could be verified for this page. Law firm blogs cite higher case counts and similar success rates, but those are not government figures and are not repeated here.
• Policy can change. The guidance is an internal litigation policy, not a statute or regulation. It can be revised or withdrawn without an act of Congress. Anyone relying on it should check the DOJ page for the current version on the day they file.

Private student loans

Private loans are the messier category. Section 523(a)(8)(B) protects "qualified education loans." The tax code defines those as loans used solely for qualified higher education expenses, at an eligible school, for an eligible student, within the cost of attendance. Some loans do not fit that definition: certain loans for non-accredited programs, bar-exam or residency loans, or amounts beyond the school's cost of attendance. Several courts have held that those fall outside §523(a)(8) entirely. Those loans are discharged like a credit card, with no hardship showing.

Whether a specific private loan qualifies is a fact question that turns on the loan documents, the school, and the circuit. It is also the single most valuable question a bankruptcy attorney can answer for a borrower with private loans, because the difference is between an adversary proceeding and nothing at all.

Chapter 13 and student loans

Chapter 13 does not discharge student loans either; §1328(a)(2) carries §523(a)(8) into the plan discharge. What Chapter 13 does is pause collection for three to five years and let the borrower pay the loan through the plan alongside other unsecured debt, often at a lower monthly amount. Interest generally keeps accruing. A borrower can also file the adversary proceeding during a Chapter 13 case. Some courts allow the hardship question to be decided near the end of the plan, when the borrower's circumstances are clearer.

Common mistakes to avoid

• ✕Assuming the discharge order covers student loans because they were listed in the schedules. Listing them is required; discharging them requires the adversary proceeding.
• ✕Filing the adversary complaint without the attestation form for a federal loan. The form is what the government attorney evaluates.
• ✕Reporting actual spending instead of expenses measured against the IRS standards. The guidance uses the standards, and a form built on the wrong numbers loses credibility.
• ✕Treating a private loan as automatically protected. Some are not qualified education loans and may be dischargeable without a hardship showing.
• ✕Skipping income-driven repayment applications before filing. Good faith is easier to show with a record of trying the normal options.
• ✕Relying on a success-rate statistic from a law firm blog. The only official numbers are from DOJ's 2023 release and describe a self-selected group.

Frequently asked questions

Can student loans be discharged in bankruptcy?

Yes, but only through a separate adversary proceeding in which the court finds that repaying the loan would impose an undue hardship under 11 U.S.C. §523(a)(8). Without that proceeding, the loan survives both a Chapter 7 and a Chapter 13 discharge. For federal loans, the DOJ's 2022 guidance has made the process more predictable for borrowers who meet its three conditions.

What is the Brunner test for student loans?

The Brunner test, used by most federal circuits, requires a borrower to show three things. First, paying the loan would prevent a minimal standard of living. Second, that situation is likely to persist for a significant part of the repayment period. Third, the borrower has made good-faith efforts to repay. The Eighth Circuit uses a totality-of-the-circumstances test instead.

What is the student loan attestation form?

It is a standardized form, published by the Department of Justice and updated in May 2025, that a borrower completes after filing the adversary proceeding on a federal loan. It collects income, expenses measured against IRS standards, loan history, and hardship facts. The government attorney uses it to decide whether to recommend full or partial discharge under the November 2022 guidance.

How often are student loans actually discharged?

The only official figures come from a November 2023 DOJ release covering the first ten months of the new process: 632 cases filed, and full or partial discharge granted in 99 percent of the cases decided by then. Those numbers reflect a small, self-selected group of borrowers who filed. No later official update could be verified, and the guidance is a policy that can change.

Are private student loans treated the same as federal loans?

Only if they are "qualified education loans" under Internal Revenue Code §221(d)(1). Loans that meet that definition are protected by §523(a)(8) and require a hardship finding. Private loans that fall outside it, such as some loans for unaccredited programs or amounts above the cost of attendance, have been treated by several courts as ordinary dischargeable debt. The DOJ guidance does not apply to private loans.

Does Chapter 13 help with student loans?

Chapter 13 does not discharge them, but it stops collection for the three-to-five-year plan and lets the borrower pay them through the plan alongside other unsecured debts, often at a reduced monthly amount. Interest usually continues to accrue. A borrower may also bring the undue-hardship adversary proceeding during a Chapter 13 case.

When to talk to a professional