Whether student loans can be discharged in bankruptcy is one of the most persistent points of confusion in consumer finance. For years, borrowers were told that student debt was effectively untouchable, regardless of circumstances. That belief was never entirely accurate, but it has become increasingly outdated.
By 2026, both federal and private student loan borrowers have clearer pathways for seeking relief through bankruptcy, particularly in cases involving long-term financial hardship. Changes in enforcement guidance and court practices have made it more realistic for some borrowers to challenge student loan balances, even though the process remains demanding.
Bankruptcy is still a serious legal step, and discharging student loans is not automatic. Borrowers must meet specific standards and provide detailed evidence. However, for those who have exhausted income-driven repayment plans, deferment options, or negotiated settlements, bankruptcy is no longer something that can be dismissed out of hand.
Federal student loan borrowers often face the biggest hurdles when seeking bankruptcy relief. While credit card debt and medical bills are commonly discharged in bankruptcy, federal student loan debt has long been treated differently.
The Department of Education has updated its policies to make relief more accessible. Borrowers must still prove undue hardship, but the process is now more streamlined and transparent.
No. Student loans are not automatically discharged in bankruptcy. Instead, the borrower must file an additional legal action called an adversary proceeding. In this case, the bankruptcy court determines whether your loans meet the threshold for discharge.
Federal student loans and private loans are both eligible for review, but each is assessed on different criteria. You must show that repaying your loans would cause undue hardship and that you've made a good faith effort to repay them.
There are two main types of student loans: federal and private. Federal loans include Direct Loans, Perkins Loans, and other forms of federal student aid. Private student loans are issued by banks or non-government lenders.
Private student loan borrowers sometimes face a different analysis than federal borrowers in bankruptcy. One reason is that many private loans do not offer income-driven repayment options, which can make it easier to show financial strain. Courts have also clarified in recent years that not every private loan automatically qualifies as “educational debt” under the bankruptcy code. In some cases, private loans may be treated more like unsecured consumer debt, depending on how the funds were used and how the loan was structured.
Including student loans in a bankruptcy case involves more than listing them on standard paperwork. Borrowers who seek to discharge student debt must ask the bankruptcy court for a separate review. That request triggers an adversary proceeding, which is where the court evaluates whether the loans should survive the bankruptcy.
During this process, the court looks closely at income, expenses, repayment history, and the type of loan involved. Judges also consider whether the borrower made reasonable efforts to manage or repay the debt before turning to bankruptcy as a last resort.
Most courts continue to rely on the Brunner Test when evaluating undue hardship. While the exact phrasing varies by jurisdiction, the analysis centers on three core questions: whether repayment prevents a minimal standard of living, whether the borrower’s financial situation is likely to persist, and whether reasonable efforts were made to repay the loans.
Critics argue that this standard is overly rigid, but it remains controlling law in many courts. Outcomes often depend on how judges interpret these factors in light of the borrower’s specific circumstances, which is why legal guidance can matter.
The U.S. Department of Justice and the U.S. Department of Education issued joint guidance intended to make student loan bankruptcy reviews more consistent across courts. Rather than changing the law, the guidance focuses on how government attorneys evaluate hardship claims and when they recommend discharge or settlement.
As part of this process, borrowers complete an attestation form outlining income, expenses, and repayment efforts. The Department of Justice reviews this information and provides a recommendation, which the bankruptcy judge may consider when issuing a ruling.
Details are available through the Department of Justice’s guidance on student loan bankruptcy.
The attestation form is designed to standardize how financial hardship is presented to the court. Borrowers are asked to disclose information such as income, recurring expenses, employment status, loan history, and prior repayment efforts.
Submitting the form does not guarantee discharge. Its purpose is to give the court a clearer record and reduce inconsistencies in how hardship claims are evaluated. Additional information is available at StudentAid.gov.
Even with agency guidance, the final decision rests with the bankruptcy judge. After reviewing the attestation materials and any government recommendation, the judge may approve a full discharge, grant partial relief, or require continued repayment under adjusted terms.
These decisions are fact-specific. Judges weigh documentation, testimony, and the credibility of the borrower’s financial narrative rather than relying on formulas alone.
While many borrowers hope to have all of their student loans discharged, some may only qualify for a partial discharge. The court could determine that a portion of the loan must still be repaid, depending on your income and the amount of debt remaining.
The concept of a partial discharge is especially relevant for federal student loan borrowers with high balances. It allows the judge to grant bankruptcy relief without requiring full discharge.
If your student loans are discharged in bankruptcy, the relief can be life-changing. You will no longer owe the discharged amount and your loan servicer will be instructed to stop collections.
This fresh start can allow you to focus on rebuilding your credit, saving for the future, and paying other debts. However, not all borrowers qualify, and even successful cases may result in only partial discharge.
Even if you don’t receive a full discharge, the court may reduce your loan balance or offer better repayment terms. This might include:
You can continue working with your loan servicer to manage the remaining balance. Programs like income-driven repayment or public service loan forgiveness may still be available.
For help, see our guide to student loan forgiveness.
To discharge your student loans, you’ll need to prove that repaying them would cause an undue hardship. This legal standard isn’t clearly defined in the bankruptcy code, so it’s up to the bankruptcy judge to decide based on your situation. Historically, courts have used a test called the Brunner Test, which asks three things:
Some courts also consider the “totality of the circumstances,” which gives the judge more flexibility. Either way, these cases are handled through an adversary proceeding in bankruptcy court, which is a separate legal process from your main bankruptcy case.
The attestation form plays a central role in this review process. Rather than listing technical legal arguments, the form focuses on practical financial realities. Borrowers are asked to explain whether they can make payments now, what efforts they made to repay in the past, and whether current hardship is likely to persist.
Submitting the form also authorizes the Department of Education and the Department of Justice to review relevant federal tax information, including adjusted gross income and debt obligations. This allows the agencies to verify claims without forcing borrowers to reconstruct years of records on their own.
The goal is not to guarantee discharge, but to create a clearer, more predictable record for the court. When the information supports hardship under the guidelines, government attorneys may choose not to oppose discharge, which can influence the final outcome.
Most of the current policy changes apply only to federal student loans. That means federal student loan borrowers are more likely to benefit from these updates. The attestation form, for example, is only used for loans issued or backed by the federal government, such as Direct Loans and Federal Family Education Loans (FFEL) still owned by the Department of Education.
For private student loans, the situation is more complicated. Private student loan borrowers must still prove undue hardship under the bankruptcy code, but without the support of standardized federal forms. That said, some courts have recently begun ruling that certain private loans—especially those not used directly for tuition—may qualify for discharge more easily.
Even with the new rules, discharging student loans is still harder than wiping out other debts. Many student loan borrowers assume that filing for bankruptcy means automatic forgiveness, but that’s not the case. Courts require clear evidence of financial distress, especially for people with federal student loan debt.
Common barriers include confusion about the adversary proceeding requirement, fear of appearing in court against a lender or loan servicer, and concern that future repayment obligations could become worse rather than better. Misinformation also plays a role, particularly around what bankruptcy law actually allows and who qualifies for review.
For a plain-English explanation of how student loans are treated in bankruptcy, the Student Loan Borrower Assistance Center’s guide to bankruptcy and student loans, published by the National Consumer Law Center, walks through the process and addresses many of these misconceptions.
Congress continues to debate whether student loan bankruptcy standards should be rewritten altogether. Several bills have been introduced that would soften or remove the undue hardship requirement for certain borrowers.
One proposal, the FRESH START Through Bankruptcy Act, would allow some federal student loans to be discharged after a defined waiting period. Another, the Student Borrower Bankruptcy Relief Act, proposes broader changes to how educational debt is treated under the bankruptcy code.
Unless and until these bills pass, courts continue to rely on the Brunner test, agency guidance, and case-by-case judicial review.
Bankruptcy is not the only option available to borrowers under financial strain. In many cases, relief can come through existing federal programs or negotiated solutions without court involvement.
Some borrowers qualify for income-driven repayment plans administered through Federal Student Aid, which adjust payments based on income and household size. Others may be eligible for temporary forbearance or deferment during periods of unemployment or hardship, or for longer-term relief through Public Service Loan Forgiveness.
Credit.org’s overview of the student loan debt crisis and available relief strategies explains how borrowers often resolve unaffordable debt without filing bankruptcy and why timing matters when choosing among options.
Before pursuing bankruptcy, many borrowers benefit from working with a certified counselor who understands both federal repayment systems and private student loan contracts. A qualified counselor can review loan types, assess present ability to pay, and help determine whether bankruptcy review is realistic or premature.
Credit.org’s educational resources on the dangers of using student loans to buy assets and common student loan mistakes to avoid reflect patterns counselors see repeatedly when borrowers act without guidance.
If bankruptcy is being considered as a last resort, it is important to understand the legal process before filing. Credit.org’s bankruptcy counseling services help borrowers understand their rights, obligations, and alternatives under current law.
Facing potential bankruptcy does not mean navigating the decision alone. Credit.org offers free student loan counseling to help borrowers evaluate repayment options, relief programs, and bankruptcy considerations in context.
You can sign up for free student loan assistance with a nonprofit counselor to discuss your situation and next steps.
