Can Student Loans Be Discharged in Bankruptcy?

1. Introduction

Quick Answer: Most articles on student loans bankruptcy stop at “it is very hard.” That answer is a decade out of date and it costs people money. The rules did not change. What changed is the government’s own instruction to its lawyers about when to stop fighting. DollarVisor walks through what that instruction actually says.

Roughly 1,220 borrowers asked a bankruptcy court to erase their federal student loans between November 2022 and March 2024. Against tens of millions of borrowers, that is almost nobody. Not because people tried and lost. Because they were told not to try.

This guide covers what the law requires, which test your court applies, what the government checks, how the filing works, what it costs, and when not to file.

A short explainer before the numbers.

2. Can student loans be discharged in bankruptcy?

Quick Answer: Yes. Student loans survive a normal bankruptcy discharge unless the court finds that repaying them is an “undue hardship.” Proving it takes a separate lawsuit inside your case, an adversary proceeding. Chapter 7 alone will not touch the loans. Our borrowing and debt guides cover the rest.

Section 523(a)(8) of the Bankruptcy Code is the whole problem in one sentence. Student loans are not discharged unless repayment “would impose an undue hardship on the debtor and the debtor’s dependents.”

Two things follow from that wording:

• The loans are not excluded. They are conditionally excluded, and the condition is a finding the court has to make.
• The court must decide on its own. In Espinosa, the Supreme Court held that a bankruptcy judge must make an independent undue-hardship finding even if the lender never shows up, per the Justice Department’s student loan guidance. You cannot win by default.

So a student loans bankruptcy case is really two filings. The bankruptcy handles the credit cards and the medical bills. The adversary proceeding handles the student loans, and it is optional. Skip it and the loans walk out untouched.

3. What “undue hardship” actually means

Quick Answer: Congress never defined undue hardship, so courts built their own test. Most use the three-part Brunner test: you cannot keep a minimal standard of living while paying, that will persist, and you tried in good faith. Being in default on your student loans proves none of it by itself.

Brunner comes from a 1987 Second Circuit case. All three prongs have to hold.

1. Present inability. On your current income, paying the loan would drop you below a minimal standard of living.
2. Likely to persist. Circumstances exist showing this will continue for a significant part of the repayment period.
3. Good faith. You made real efforts to repay or to manage the debt before you filed.

Prong two is where cases used to die. Judges read “likely to persist” as near-certainty that you would never earn more. Prong three killed the rest, because not enrolling in an income-driven plan was treated as proof you had not tried.

Both readings have softened. The government now tells its attorneys that past non-payment is not disqualifying when other evidence of good faith exists, and neither is skipping an income-driven plan.

4. Which test your state’s court uses

Quick Answer: Your federal circuit decides the test, not your state legislature. The Eighth Circuit uses the looser totality-of-the-circumstances test and First Circuit courts largely follow it. Everywhere else, Brunner controls. Same facts, different state, different odds, which is why our debt and borrowing hub reports by state.

The gap matters less than it used to. The Justice Department’s guidance applies in both kinds of jurisdiction, and the Eighth Circuit has said the difference “may not be that significant.”

5. What the record shows since the rules were rewritten

Quick Answer: In November 2022 the Justice and Education Departments told government lawyers to stop opposing discharge in cases meeting a set standard. Filings rose and outcomes improved sharply. This is a real route, unlike some student loan forgiveness programs people assume they qualify for.

One caveat on the 98%: it covers decided cases, not everyone who asks. Separately, 96% of filers used the attestation form voluntarily, so paperwork is not what stops people trying.

6. What the government checks before it agrees

Quick Answer: Three questions with published criteria: can you pay now, will that last, and did you try. Expenses are measured against IRS collection standards, future hardship is presumed if any of five facts apply, and good faith is proven by one ordinary step, even just applying for an income-driven repayment plan.

The expense side is what people misjudge. The IRS national standards allow one person $496 a month for food in 2026 without asking what you actually spend. If you have been eating on $250 because the loan payment took the rest, the standard counts, not your receipts.

7. How the filing works, step by step

Quick Answer: File the bankruptcy, open the adversary proceeding, send the attestation form. Government lawyers review it with the Education Department, then agree, propose a partial discharge, or fight. Ordinary steps like requesting forbearance or deferment become your good-faith evidence.

1. File the bankruptcy case. Chapter 7 or Chapter 13. The loan question needs an open case.
2. Open the adversary proceeding. A complaint under Section 523(a)(8) naming your loan holder. This is the student loans bankruptcy lawsuit itself.
3. Complete the attestation form. The standard form, updated May 2025, signed under penalty of perjury with income documents attached.
4. Wait for the joint review. The government attorney consults the Education Department, which supplies your loan history.
5. Get the recommendation. The government stipulates to undue hardship, proposes a partial discharge, or opposes. The judge still decides.

Step five is worth sitting with. Even when the government agrees, the court makes its own finding. And when it only partly agrees, several circuits allow a judge to wipe part of the balance and leave the rest.

8. Chapter 7 or Chapter 13 for student loans?

Quick Answer: Either chapter allows the adversary proceeding, so pick the chapter that fits the rest of your finances, not the loans. Chapter 7 finishes in months. Chapter 13 runs three to five years but lowers loan payments while it runs. Our guide to Chapter 7 versus Chapter 13 sets out the trade-offs.

The practical differences for a borrower carrying student debt:

• Chapter 7 is faster and cheaper. If you qualify on income, the discharge lands in roughly four months and the adversary proceeding runs alongside it.
• Chapter 13 buys time. The loans fold into a court-supervised plan, so the monthly amount tracks what you can afford for three to five years even if the balance survives.
• Filing late is allowed. The guidance can be used even after a case has closed, which matters if you filed years ago and were told the loans were untouchable.

9. Which loans this actually covers

Quick Answer: The attestation process only covers loans the Education Department holds. Private loans split in two, and one group is not protected by Section 523(a)(8) at all: it discharges like a credit card. Borrowers who defaulted years ago often hold both kinds.

The fourth row is the one people miss. A private loan that went beyond the school’s cost of attendance, or funded a school not eligible for federal aid, may sit outside Section 523(a)(8) entirely. Several federal appeals courts have said so. That loan can be wiped out with your credit cards, no hardship showing needed.

10. What it costs to try

Quick Answer: The court fee for the adversary proceeding is $0 when the debtor files it. The real cost is attorney time, and losing does not add to your balance. If you can still afford payments, the better question is which debt to attack first, not whether to sue.

The bankruptcy court fee schedule sets a $350 fee for an adversary complaint, then removes it: the fee “must not be charged if the debtor is the plaintiff.”

What remains:

• Attorney fees. Most bankruptcy lawyers price the adversary proceeding separately. Ask for that number before you sign.
• Time. Assembling tax returns, pay records and loan history is the bulk of the work, and you do it once.
• Downside if you lose. The loan stays and does not grow because you asked. A denial still leaves deferment, forbearance and income-driven plans open.

11. When not to file

Quick Answer: If your income is steady and the only problem is the payment size, an income-driven plan fixes that without a lawsuit or a bankruptcy on your record. Discharge is for situations that will not improve, which is what the five presumptions describe.

Three cases where the answer is usually no:

• The hardship is temporary. A layoff you expect to recover from fails the “likely to persist” test in every circuit.
• You qualify for a targeted program. Public service, disability and closed-school relief each have their own path. Check which forgiveness programs are real first.
• Your other debts are manageable. Bankruptcy is a whole-balance-sheet tool, not a student loan tool.

12. Conclusion

Quick Answer: Student loans can be discharged in bankruptcy, the criteria are published, the court fee is zero, and 98% of decided cases under the federal guidance produced full or partial relief. The honest limit: you must genuinely be unable to pay, now and ahead.

The myth that student loans bankruptcy is impossible outlived the reality by about a decade. It still shapes what servicers say and what borrowers believe.

If the five presumptions describe your life, the paperwork is a questionnaire and the filing is free. Read the attestation form, price the attorney time, decide from there.

13. Frequently Asked Questions

1. Can student loans be discharged in Chapter 7 bankruptcy?

Yes, but not by the Chapter 7 discharge itself. You file an adversary proceeding inside the case and prove undue hardship. Skip that step and the loans survive the bankruptcy, with collection resuming once the case closes.

2. What is the attestation form and do I have to use it?

It is the Justice Department’s standard questionnaire on your income, expenses, repayment history and prospects. Using it is voluntary, but 96% of borrowers filing under the guidance chose to, because it replaces open-ended discovery with fixed questions.

3. How much does it cost to sue to discharge student loans?

The court’s $350 adversary filing fee is not charged when the debtor is the plaintiff, so the filing is free. Attorney fees are the real expense and vary widely, so ask for a separate quote for the adversary proceeding.

4. Does it matter which state I file in?

Somewhat. Courts in the Eighth Circuit, and most bankruptcy courts in the First Circuit, use the more flexible totality-of-the-circumstances test. Everywhere else, Brunner applies. You cannot pick your circuit, and moving to file is not realistic.

5. Can private student loans be discharged in bankruptcy?

Some can, more easily than federal ones. A private loan that is not a “qualified education loan” (one that exceeded the school’s cost of attendance, say) may sit outside the student loan exception and be discharged like any unsecured debt.

6. What if my bankruptcy case already closed?

You may still be able to act. The guidance can be used by borrowers who filed previously, including those whose cases have closed, though reopening a case has its own procedure and cost. Ask a bankruptcy attorney directly.

Information, not legal or financial advice. Outcomes depend on your facts and your court. See our disclaimer.