Table of Contents
- Student Loans & Bankruptcy: Is Discharge Ever Possible?
- Why Student Loans Are Treated Differently in Bankruptcy
- What Is the ‘Undue Hardship’ Standard?
- 1. Brunner Test (most common)
- 2. Totality of Circumstances Test
- What Types of Student Loans Can Be Discharged?
- Realistic Outcomes
- Alternative Relief Strategies Outside Bankruptcy
- Recent Developments in Student Loan Bankruptcy Law
- How a Bankruptcy Attorney Near You Can Help
- ReferU.AI Connects You With Bankruptcy Attorneys That Understand Student Loan Challenges
- Final Thought: Discharging Student Loans Isn’t Easy—But It’s Not Impossible
Ready to Publish
Ready to Publish
Author
OG Image (1200x630)
Excerpt
Navigating the complexities of student loans and bankruptcy can be daunting, especially since discharging these debts is notoriously difficult. This blog post explores the circumstances under which student loans may be discharged in bankruptcy, the legal standards involved, and how an experienced bankruptcy attorney near you can help you find relief from overwhelming debt.
Meta Description
Struggling with student loans and wondering if bankruptcy can help? Discover the challenges of discharging student loans through bankruptcy, including the "undue hardship" standard, realistic outcomes, and how a bankruptcy attorney near you can guide you through the complexities of the process.
Slug
bankruptcy-law-guide/non-dischargeable-debts-student-loans-taxes-exceptions/student-loans-bankruptcy-discharge-options
Alt Image Text
A flat vector illustration depicting a person overwhelmed by student loan debt, surrounded by student loan documents, scales of justice, and a bankruptcy court backdrop. A bankruptcy attorney is shown offering legal guidance, symbolizing the legal complexities of student loan discharge through bankruptcy.
Global Tags
Sub-item
Hide in Main Feed
Hide in Main Feed
Post Id
1582
Updated
Mar 30, 2025 06:23 PM
Featured
Featured
Hide CTA
Hide CTA
Hide Cover
Hide Cover
Student Loans & Bankruptcy: Is Discharge Ever Possible?
For many Americans, student loans feel like a lifelong financial burden—and unlike most consumer debts, they’re notoriously hard to eliminate through bankruptcy. But is it truly impossible to discharge student loan debt? Not entirely. While challenging, it’s not out of reach with the right circumstances, legal strategy, and support from a bankruptcy attorney near you.
In this post, we’ll break down how student loans are treated in bankruptcy, the legal standard for discharge, recent legal developments, and realistic options for borrowers seeking relief.
💡 For every post in this series, scroll down to “Related Posts.”
Why Student Loans Are Treated Differently in Bankruptcy
Under current U.S. Bankruptcy Code (Section 523(a)(8)), student loans are generally non-dischargeable unless the borrower can prove they impose an “undue hardship.” This high legal threshold makes student loans more difficult to eliminate than credit cards, medical bills, or personal loans.
What Is the ‘Undue Hardship’ Standard?
To have student loans discharged in bankruptcy, borrowers must initiate a separate lawsuit called an adversary proceeding and demonstrate undue hardship. Courts typically use one of two tests:
1. Brunner Test (most common)
Borrower must prove:
- They cannot maintain a minimal standard of living while repaying loans
- Their financial situation is unlikely to improve
- They’ve made good faith efforts to repay the debt
2. Totality of Circumstances Test
Courts consider all relevant factors, including income, expenses, health, age, and future job prospects.
What Types of Student Loans Can Be Discharged?
- Federal student loans (Direct Loans, FFEL, Perkins): require undue hardship proof
- Private student loans: some courts are increasingly open to discharge if the loan doesn’t meet federal criteria (e.g., not used for tuition or not certified by an institution)
Recent case law suggests courts may be becoming more flexible in some private student loan scenarios, especially if the debt resembles a personal loan.
Realistic Outcomes
- Full discharge: All student loans eliminated (rare, but possible)
- Partial discharge: Only some loans or a portion of debt eliminated
- Revised repayment terms: Negotiated through bankruptcy or court mediation
- Denial of discharge: Debt remains, but borrower may still benefit from eliminating other debts
Alternative Relief Strategies Outside Bankruptcy
Even if discharge isn’t granted, filing for bankruptcy can help by:
- Freeing up income by discharging other debts, making student loan repayment more manageable
- Pausing collection actions temporarily under the automatic stay
- Prompting negotiation or settlement offers from lenders
Borrowers can also explore:
- Income-Driven Repayment (IDR) plans
- Public Service Loan Forgiveness (PSLF)
- Closed school or borrower defense discharge (for federal loans)
Recent Developments in Student Loan Bankruptcy Law
There is increasing momentum for reform:
- Some federal courts are applying undue hardship more liberally
- The U.S. Department of Justice and Department of Education issued 2022 guidance streamlining undue hardship evaluation for federal loans
These changes may help more borrowers qualify for relief—especially those with long-term hardship, disability, or age-related financial limitations.
How a Bankruptcy Attorney Near You Can Help
Discharging student loans requires legal precision, compelling evidence, and skilled representation. A bankruptcy attorney near you can:
- Assess whether you meet undue hardship standards
- File an adversary proceeding
- Compile supporting financial and medical documentation
- Argue your case in court
Even if discharge is unlikely, a qualified attorney can help you explore better repayment strategies and maximize relief from other debts.
ReferU.AI Connects You With Bankruptcy Attorneys That Understand Student Loan Challenges
ReferU.AI connects you with a bankruptcy attorney near you who knows how to approach student loan hardship cases and guide you through every legal avenue for relief. Our AI-driven platform matches you with local attorneys who have experience handling complex discharge cases and creditor negotiations.
Final Thought: Discharging Student Loans Isn’t Easy—But It’s Not Impossible
Bankruptcy isn’t a magic wand, but it’s a tool worth exploring. If you’re drowning in student debt and have exhausted other options, legal discharge may be worth fighting for—with the right strategy and legal help by your side.
Written by
