Can Student Loans Be Discharged in Bankruptcy?

**Yes, Student Loans Can Be Discharged in Bankruptcy. Really.**

For many years, people were told that student loans couldn’t be wiped out in bankruptcy. That was once mostly true — but it’s not true anymore.

Since 2022, thousands of borrowers have received bankruptcy discharges of their federal student loans. This is because the Department of Education and the Department of Justice created a much clearer and fairer process for borrowers who truly cannot repay.

Why people still think student loans can’t be discharged

Before 2022, bankruptcy courts used something called the Brunner test, based on a 1987 court case. Under this test, borrowers had to prove three very hard things:

They couldn’t maintain a minimal standard of living if forced to repay.
Their situation was likely to stay that way for most of the repayment period.
They had tried, in good faith, to repay their loans.

This standard was so tough that most people didn’t even try, and lawyers often told borrowers not to bother.

What changed in 2022

In 2022, the Justice Department and the Department of Education announced a new, more reasonable process for people seeking a student loan discharge in bankruptcy.

Here’s how it works now:

You fill out an attestation form.
This form explains your income, expenses, health, work history, and other important details.
Government attorneys review your situation.
They look at three main areas to decide whether to support a discharge:

• Present Ability to Pay
They compare your income to your necessary living expenses (using IRS standards).
If your expenses are equal to or higher than your income, you are considered unable to pay right now.

• Future Ability to Pay
They look at whether your situation is likely to improve.
They assume your hardship will continue if you:
- Are older or near retirement
- Have a disability or chronic health issue
- Have a long unemployment history
- Don’t have a degree
- Have been in repayment for many years

If none of these apply, they look more closely at your individual situation.

• Good Faith Efforts
They check whether you made reasonable efforts to manage your loans — things like trying to find work, managing expenses, or contacting your servicer.
You will NOT be punished for past non-payment, and you do not have to have used an IDR plan if you had a good reason not to.
The government may support full or partial discharge.
Even if you don’t meet every factor perfectly, the Justice Department can still support partial discharge — something courts rarely allowed before.
The bankruptcy judge makes the final decision.
But when the government supports discharge, judges often agree.