Student Loans and Bankruptcy: The General Rule
Student loans are generally not dischargeable in bankruptcy. Unlike credit cards, medical bills, or personal loans, student loans survive both Chapter 7 and Chapter 13 unless you can prove "undue hardship" through a separate legal proceeding called an adversary proceeding.
This applies to both federal and private student loans. The non-dischargeability rule comes from 11 U.S.C. section 523(a)(8) and has been one of the most debated provisions in bankruptcy law.
The Undue Hardship Test
Most courts use the Brunner test, which requires showing: (1) you cannot maintain a minimal standard of living while repaying the loans, (2) your situation is likely to persist for a significant portion of the repayment period, and (3) you have made good-faith efforts to repay.
Some circuits (notably the 1st, 7th, and 8th) use the more flexible "totality of circumstances" test, which considers the overall picture rather than applying rigid criteria. Recent court decisions have also pushed for a more debtor-friendly interpretation.
2022 DOJ Guidance: A New Path
In November 2022, the Department of Justice issued new guidance creating an attestation-based process for federal student loan discharge in bankruptcy. Debtors can now complete a form (DOJ Attestation Form) that the government uses to evaluate whether to consent to discharge.
Early results are promising -- the DOJ has consented to discharge in many cases that would have been contested under the old approach. However, this only applies to federal student loans, not private loans.
Chapter 7 vs Chapter 13: Student Loan Strategy
In Chapter 7, your student loan payments stop temporarily during the case (3-4 months), but interest continues to accrue. After discharge of other debts, you may have more income available for student loan payments.
In Chapter 13, student loans can be included in your repayment plan. While the loans themselves are not discharged, making payments through the plan counts as repayment. Some courts allow "modified" plans that direct extra funds to student loans.
Strategy: Many bankruptcy attorneys recommend filing Chapter 7 to eliminate all other debts, then using the freed-up income for aggressive student loan repayment or pursuing income-driven repayment (IDR) plan forgiveness.
Income-Driven Repayment After Bankruptcy
Federal student loan borrowers can enroll in income-driven repayment (IDR) plans after bankruptcy. Under the SAVE, PAYE, or IBR plans, payments are based on discretionary income. After 20-25 years of payments (or 10 years under PSLF), remaining balances are forgiven.
Filing Chapter 7 and eliminating other debts can reduce your AGI, which lowers your IDR payments -- sometimes to $0/month. This creates a pathway to eventual forgiveness without the difficulty of proving undue hardship.
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Last updated: April 2026. Not legal advice.
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