Official Verification: Student Loan Bankruptcy Discharge Is Real

Student loan discharge in bankruptcy is no longer a myth.

For years, borrowers were told the same thing over and over again:

“You can’t discharge student loans in bankruptcy.”

That statement is outdated.

The proof is now published in the American Bankruptcy Law Journal. In “Bridging the Student Loan Bankruptcy Gap,” 99 American Bankruptcy Law Journal 414, Professor Jason Iuliano reviews what has happened after the 2022 Department of Justice and Department of Education reforms for student-loan bankruptcy cases.

The article reports that borrowers who actually pursued student-loan discharge in bankruptcy saw dramatically improved outcomes, with success rates reaching 87% in the post-reform period. That is not internet rumor. That is not social media hype. That is published legal scholarship reviewing real bankruptcy outcomes.

I’m Anthony Perano, a New York attorney since 1988, with more than 35 years of experience practicing consumer bankruptcy law. I have represented consumers in bankruptcy cases for decades, and I now help student loan borrowers understand whether bankruptcy discharge should be part of their overall strategy.

Here is what borrowers need to understand.

Student loans are not automatically discharged in bankruptcy. A borrower has to file a bankruptcy case and then bring a separate student loan discharge case, called an adversary proceeding. The borrower must show that repayment would create an undue hardship.

But the legal landscape has changed.

Under the DOJ and Department of Education’s 2022 process, the government now uses a more structured review of hardship. That review can include income, expenses, age, medical issues, disability, employment limitations, family obligations, payment history, and whether repayment is realistically possible now and in the future.

That does not mean everyone qualifies.

That does not mean the result is guaranteed.

But it does mean borrowers should stop assuming there is no way out.

The real tragedy is that most borrowers never even try. Many people continue struggling with unaffordable payments, growing balances, default, garnishment threats, Social Security offset, retirement pressure, medical problems, disability, reduced income, or decades of repayment because they were told years ago that bankruptcy was impossible.

That advice is no longer complete.

Student loan bankruptcy discharge is now a serious option that deserves review, especially for borrowers facing long-term financial hardship, unaffordable payments, growing balances, medical problems, disability, reduced income, retirement or near-retirement, default, wage garnishment, Social Security offset, or decades of repayment with no realistic end in sight.

The key question is not simply:

“Do I have student loans?”

The real question is:

“Can I realistically repay these loans while maintaining a minimal standard of living, now and in the future?”

That is the analysis borrowers need.

If you want to know whether student loan bankruptcy discharge should be part of your strategy, visit PeranoLaw.com and book a consultation.

Article Reference

Jason Iuliano, “Bridging the Student Loan Bankruptcy Gap,” 99 American Bankruptcy Law Journal 414, Vol. 99, Issue 3, Fall 2025.

The article is published by the American Bankruptcy Law Journal and listed in Volume 99, Issue 3, beginning at page 414.