You May Be Able to Discharge Your Student

Loans in Bankruptcy

The Federal Government Changed How Student Loan Bankruptcy Cases Are Evaluated

For years, borrowers were told that student loans could almost never be eliminated in bankruptcy.

That was never the complete story—and the process for federal student loan borrowers has now become clearer and more structured.

Under the current Department of Justice process, a borrower may request a full or partial discharge of federal student loans when repayment would impose an undue hardship.

The government now uses a standardized financial attestation form to evaluate the borrower’s income, necessary living expenses, loan history, employment circumstances, age, health-related limitations, and future ability to repay.

This does not mean that every borrower automatically qualifies. It does mean that many borrowers who previously believed they had no way out may now have a legal option worth investigating.

Watch: How the Federal Student Loan Discharge Process Works

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What Changed Under the New Federal Process?

For years, borrowers were commonly told that student loans could almost never be discharged in bankruptcy.

That was never completely accurate.

In November 2022, the U.S. Department of Justice and Department of Education introduced a more organized process for reviewing federal student loan bankruptcy cases.

The government now uses a standardized financial attestation form to evaluate a borrower’s:

Income
Necessary living expenses
Employment history
Age
Health-related limitations
Student loan payment history
Future ability to repay

This process allows government attorneys to evaluate whether they should support a full discharge, partial discharge, or another resolution

.A discharge is not automatic. The borrower must still file the proper bankruptcy case and adversary proceeding, provide accurate financial information, and satisfy the legal undue-hardship standard.

Can Student Loans Really Be Discharged in Bankruptcy?

Yes.

Federal law does not say that student loans can never be discharged.

Instead, certain student loans are not automatically discharged unless requiring repayment would impose an undue hardship on the borrower and the borrower’s dependents.

To request this relief, the borrower usually files a separate lawsuit inside the bankruptcy case. This is called an adversary proceeding.

The result may be:

A full discharge
A partial discharge
A negotiated resolution
No discharge if the legal standard is not satisfied

The newer federal review process can make the government’s evaluation more organized, but it does not guarantee approval.

[Schedule a Student Loan Strategy Session]

The bankruptcy court ultimately decides whether the legal requirements have been met.

Who May Qualify for a Student Loan Bankruptcy Discharge?

There is no single income limit or loan balance that automatically determines whether someone qualifies. The borrower’s full financial situation must be reviewed.

A borrower may have a stronger reason to explore discharge when:

The monthly student loan payment is unaffordable
The loan balance continues to grow because of interest
The borrower is approaching retirement
A disability or chronic health condition limits earning ability
Income has remained low for many years
The education did not lead to the expected employment or income
Long-term unemployment or unstable work has prevented repayment
Student loans are part of a larger financial crisis

These circumstances do not guarantee a discharge. Each case depends on the borrower’s income, expenses, age, health, employment history, loan history, and future ability to repay.

The Three Main Questions in a Federal Student Loan Discharge Review

The government generally looks at three main issues.

1. Can You Afford to Repay the Loans Now?

The review compares your income with your reasonable and necessary living expenses.

The question is whether you can make the student loan payment while still paying for basic needs such as:

Housing
Food
Utilities
Transportation
Medical care
Insurance
Taxes
Childcare
Support for dependents

2. Is Your Financial Difficulty Likely to Continue?

The government also considers whether your financial hardship is temporary or likely to continue for a significant period.

Relevant circumstances may include:

Age
Disability
Chronic illness
Limited employment opportunities
Long-term low income
Unemployment
Caregiving responsibilities
Retirement
An education that did not produce the expected income

3. Have You Made a Good-Faith Effort?

Good faith does not necessarily mean that every payment was made.

The review may consider whether you:

Tried to make payments
Contacted your loan servicer
Applied for an income-driven repayment plan
Requested deferment or forbearance when needed
Searched for employment
Tried to increase your income
Reduced expenses where reasonably possible
Took steps to address the debt

No single fact determines the outcome. The complete financial history must be reviewed.

How the Student Loan Attestation Process Works

The attestation is a detailed financial form used by the federal government to evaluate a request to discharge federal student loans in bankruptcy.

It is not a stand-alone application.

A borrower generally must first:

File a bankruptcy case.
File a separate adversary proceeding requesting a student loan discharge.
Provide the government with the completed attestation and supporting financial information.
Cooperate with any requests for additional records or explanations.
Obtain an agreement or a decision from the bankruptcy court.

The attestation asks for information about:

Household size
Income
Monthly living expenses
Employment history
Education history
Student loan balances
Payment history
Repayment-plan history
Medical or disability-related limitations
Circumstances affecting future earning ability

The form must be completed carefully and truthfully.

Incomplete, inaccurate, or unsupported information can weaken the case.

The government reviews the borrower’s current ability to pay, future financial circumstances, and prior efforts to address the loans before deciding whether to support a full discharge, partial discharge, or another resolution.

[View the Official DOJ Attestation Form]

Full Discharge Versus Partial Discharge

A student loan bankruptcy case is not always all or nothing.

Depending on the borrower’s circumstances, the result may include:

Full Discharge

The borrower is no longer legally responsible for the covered student loan debt.

Partial Discharge

A portion of the student loan balance is eliminated, while the borrower remains responsible for the rest.

Negotiated Resolution

The borrower and the government may agree to another result based on what the borrower can realistically afford.

No Discharge

The debt may remain if the borrower does not meet the legal undue-hardship standard.

A partial discharge can still provide major relief, especially when the loan balance has grown far beyond the amount originally borrowed or when full repayment is unrealistic.

The outcome depends on the borrower’s complete financial situation, the applicable law, the government’s position, and the bankruptcy court’s final decision.

Which Student Loans May Be Covered?

The Department of Justice attestation process is primarily used in bankruptcy cases involving federal student loans.

Federal loans may include:

Direct Subsidized Loans
Direct Unsubsidized Loans
Direct Consolidation Loans
Parent PLUS Loans
Graduate PLUS Loans
Certain FFEL Program loans
Certain Perkins Loans

Private student loans may also be reviewed in bankruptcy, but they are handled differently.

The federal attestation process does not usually control how a private lender evaluates a case.

Private student loans require a separate review of:

The loan agreement
The school and educational program
The amount borrowed
The school’s cost of attendance
How the loan money was used
Whether the debt qualifies as a protected educational loan under bankruptcy law
Whether repayment would impose an undue hardship, when that legal standard applies

Some private educational debts may not qualify for special protection from discharge at all.

The actual loan documents and the use of the loan proceeds should be reviewed before deciding how the debt may be treated in bankruptcy.

What Happens During the Bankruptcy Process?

A student loan discharge request is usually one part of a larger bankruptcy case.

Before filing, the borrower’s complete financial situation should be reviewed.

This includes:

Income
Monthly expenses
Property
Home equity
Vehicles
Retirement accounts
Bank accounts
Credit-card debt
Medical debt
Tax debt
Judgments
Federal student loans
Private student loans

Step 1: Determine Whether Bankruptcy Is Appropriate

Bankruptcy should not be filed only because someone saw a video or found the attestation form online.

The borrower should first determine whether bankruptcy makes sense based on the complete financial situation.

Step 2: Choose the Proper Bankruptcy Chapter

Individuals usually consider Chapter 7 or Chapter 13.

Chapter 7 may eliminate many unsecured debts, subject to income requirements and property exemptions.

Chapter 13 generally involves a court-supervised repayment plan lasting several years.

The correct chapter depends on the borrower’s income, assets, debts, prior bankruptcy history, and goals.

Step 3: File the Bankruptcy Case

The borrower files the bankruptcy petition, financial schedules, creditor information, and other required documents with the bankruptcy court.

Step 4: File the Adversary Proceeding

The borrower must usually file a separate lawsuit within the bankruptcy case asking the court to discharge the student loans.

This lawsuit is called an adversary proceeding.

Step 5: Complete the Government Review

For eligible federal student loans, the borrower submits the attestation and supporting financial information.

The government then reviews the borrower’s ability to pay, expected future circumstances, and prior efforts to address the debt.

Step 6: Reach a Resolution

The government may support a full discharge, support a partial discharge, request additional information, negotiate another resolution, or oppose the request.

The bankruptcy judge makes the final decision.

Documents You May Need

Strong documentation is important in a student loan bankruptcy case.

The borrower may need to provide records showing income, expenses, loan history, employment circumstances, and future ability to repay.

Documents may include:

Recent federal income tax returns
Recent pay stubs
Bank statements
Social Security benefit statements
Pension or retirement income statements
Proof of unemployment income
Medical bills and insurance records
Rent or mortgage statements
Utility bills
Vehicle expenses
Childcare or dependent-support expenses
StudentAid.gov loan records
Loan servicer account statements
Student loan payment histories
Income-driven repayment applications
Deferment or forbearance records
Employment and unemployment history
Records showing disability or chronic health limitations, when relevant

The exact documents depend on the facts of the case.

Records should be accurate, current, and consistent with the information provided in the bankruptcy schedules and attestation.

Missing or conflicting information can delay the review or weaken the borrower’s request for relief.

Common Misunderstandings

Many borrowers do not explore bankruptcy because they have been given incomplete or outdated information.

“Student Loans Can Never Be Discharged”

That is incorrect.

Student loans are not automatically discharged in most bankruptcy cases, but they may be fully or partially discharged when the borrower proves that repayment would impose an undue hardship.

“I Only Need to Complete the Attestation Form”

The attestation is not a stand-alone forgiveness application.

It is generally used as part of an adversary proceeding filed within a bankruptcy case.

“I Must Be Unemployed to Qualify”

A borrower may be employed and still be unable to repay student loans while maintaining a reasonable standard of living.

The review considers income together with necessary household expenses and future earning ability.

“Only Elderly or Disabled Borrowers Can Qualify”

Age, disability, and chronic illness may strengthen a case, but they are not the only relevant circumstances.

Long-term low income, unstable employment, caregiving obligations, and an education that did not produce the expected earnings may also be important.

“Income-Driven Repayment Prevents a Bankruptcy Discharge”

Being eligible for an income-driven repayment plan does not automatically prevent a borrower from seeking relief in bankruptcy.

The borrower’s actual financial circumstances, loan history, and future ability to repay must still be reviewed.

“Filing Bankruptcy Automatically Eliminates the Student Loans”

Student loans are not ordinarily discharged merely because a bankruptcy case was filed.

The borrower usually must file a separate adversary proceeding and obtain either an agreement or a court decision.

Every case is different, and no result can be guaranteed.

Frequently Asked Questions

Can All Student Loans Be Discharged in Bankruptcy?

Not automatically.

The treatment of the debt depends on the type of loan, the facts of the case, and the applicable bankruptcy law.

Federal student loans evaluated through the current Department of Justice process generally require an undue-hardship analysis.

Do I Just Complete the Attestation Form and Send It to the Department of Education?

No. The attestation is generally used as part of an adversary proceeding filed within a bankruptcy case.

Completing the form by itself does not begin a student loan discharge case.

Do I Have to Be Unemployed to Qualify?

No.

A borrower may be employed and still be unable to repay student loans while maintaining a reasonable standard of living.

Income, household expenses, future earning ability, age, health, dependents, and repayment history may all be relevant.

Can Parent PLUS Loans Be Reviewed?

Yes.

Federal Parent PLUS Loans may be included in an undue-hardship discharge request, but the borrower’s complete financial circumstances and the status of the loans must be reviewed.

Can Private Student Loans Be Discharged?

Some private student loans may be dischargeable.

However, the Department of Justice attestation process is primarily designed for federal student loan cases.

Private loans require a separate examination of the loan documents, educational program, institution, cost of attendance, use of the loan proceeds, and applicable bankruptcy law.

Does Filing Bankruptcy Guarantee That My Student Loans Will Be Discharged?

No.

No attorney can guarantee a discharge.

The government’s position, the evidence, applicable law, and the bankruptcy judge’s decision determine the result.

Do I Need a Lawyer?

A borrower is not always legally required to have an attorney, but student loan adversary proceedings are federal lawsuits.

The borrower must comply with bankruptcy rules, court procedures, service requirements, deadlines, evidence requirements, and the applicable undue-hardship standard.

Legal advice can help a borrower understand the risks, available options, and strength of the case.

Speak With a Federal Student Loan Lawyer

Student loan bankruptcy cases require an individualized review.

A borrower’s income, necessary living expenses, age, health, employment history, assets, loan type, payment history, and future ability to repay can all affect the available options.

Anthony J. Perano has practiced in federal court for more than 35 years and provides nationwide student loan strategy consultations.

During a strategy session, we can review:

Whether bankruptcy should be considered
Whether a full or partial student loan discharge may be possible
The difference between federal and private student loans
The borrower’s repayment and forgiveness alternatives
The documents that should be gathered
The possible risks, costs, and next steps

Important Disclaimer

This page provides general educational information and is not legal advice.

Reading this page, downloading a guide, or contacting PeranoLaw does not create an attorney-client relationship.

Student loan and bankruptcy results depend on the individual facts, applicable law, government review, and court decisions. No particular result is guaranteed.