Most student loans, federal and private, are not dischargeable in regular bankruptcy. To discharge a student loan, you must file a separate proceeding within the bankruptcy case called an adversary proceeding and prove the loan causes you 'undue hardship.' The standard is high but not impossible, and recent Department of Justice guidance has made the process meaningfully easier than it was for the prior two decades.
Why student loans are different. The Bankruptcy Code excludes from discharge 'an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution' (11 U.S.C. § 523(a)(8)). The same section excludes most private educational loans that fit the IRS definition of a qualified education loan. To get past this exclusion, you have to bring an adversary proceeding and meet the undue hardship test.
The Brunner test. Most circuits use the three-part test from Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987). To prevail, you must prove: (1) you cannot maintain a minimal standard of living for yourself and your dependents if forced to repay the loan, based on current income and expenses; (2) additional circumstances suggest this state of affairs will persist for a significant portion of the repayment period; and (3) you have made good-faith efforts to repay the loans. The Eighth and First Circuits use slightly different formulations.
The 2022 DOJ guidance changed everything. In November 2022, the Department of Justice and the Department of Education jointly issued guidance simplifying the federal government's approach to undue hardship in student-loan discharge cases. Borrowers now complete a standardized attestation form documenting income, expenses, future earnings potential, and prior repayment efforts. DOJ attorneys evaluate the form using clear thresholds, and in many cases recommend full or partial discharge without contested litigation. The guidance has produced a significant uptick in successful federal student-loan discharges since 2023.
What 'undue hardship' looks like in practice. Successful cases typically involve filers who are permanently or long-term disabled, are caring for a disabled dependent, are at or past retirement age with no realistic future income growth, or have a long documented history of underemployment despite good-faith efforts. A borrower in their late 50s with a chronic illness and $80,000 of federal student debt has a much better case than a 32-year-old who has only tried income-driven repayment for a year.
Federal versus private loans. The new DOJ guidance only covers federal loans. Private loans must still meet the Brunner test against the private lender, who is usually represented by counsel and is not bound by DOJ guidance. Private loan discharges remain harder than federal ones, though some private loan portfolios (especially loans that don't meet the IRS qualified-education-loan definition) may not be covered by the § 523(a)(8) exclusion at all and can be discharged as ordinary unsecured debt.
Costs. An adversary proceeding is a separate lawsuit within the bankruptcy case. Filing fees for the adversary are $350. Attorney fees for the adversary typically run $3,000 to $7,500 above the base Chapter 7 attorney fee. Some bankruptcy attorneys handle them on contingency or sliding scale; some pro bono programs (Project on Predatory Student Lending, the Veterans Consortium Pro Bono Program) take qualifying cases at no cost.
Alternatives to discharge. Before filing, check whether you qualify for income-driven repayment forgiveness (SAVE plan when not paused; otherwise PAYE, IBR, or ICR), Public Service Loan Forgiveness if you work for a qualifying employer, Total and Permanent Disability discharge through Federal Student Aid (this does not require bankruptcy), Borrower Defense to Repayment if your school engaged in misconduct, or closed-school discharge if your school shut down. These paths are usually faster and cheaper than an adversary proceeding.
Partial discharge. Even when full discharge is denied, courts can grant partial discharge, restructure payment terms, or order interest forgiveness. This is more common under the new DOJ approach than under older case law.
The honest summary. Student loans are still harder to discharge than other consumer debt. But the 2022 DOJ guidance has meaningfully expanded successful federal student-loan discharges, and the path is worth investigating for borrowers in genuine long-term financial distress.