Can Student Loans Be Discharged in Bankruptcy? The Undue Hardship Test

For decades, the standard advice about student loans and bankruptcy was brutally simple: do not bother, because you cannot win. Student loan debt was treated as nearly permanent, surviving bankruptcy while credit card balances and medical bills were wiped clean. That reputation was earned, but it is now outdated. Student loans can be discharged in bankruptcy, and since late 2022, the federal government has made the path meaningfully more navigable for borrowers who genuinely cannot pay.

The catch is that the bar remains high. Unlike other debts, student loans are not discharged automatically. You must prove that repaying them would impose an “undue hardship” on you and your dependents, through a separate lawsuit inside your bankruptcy case. This guide explains the legal standard courts use, the three-part test at its center, and the 2022 federal guidance that changed how these cases are handled.

Key Takeaways

• Under 11 U.S.C. 523(a)(8), student loans survive bankruptcy unless repaying them would impose an “undue hardship” on the borrower and their dependents.
• Getting a discharge requires filing a separate adversary proceeding inside your bankruptcy case and proving undue hardship by a preponderance of the evidence.
• Most courts apply the three-part Brunner test: you cannot maintain a minimal standard of living while repaying, your hardship is likely to persist, and you made good faith efforts to repay.
• A minority of courts, including those in the Eighth Circuit, use a “totality of the circumstances” test instead.
• November 2022 guidance from the Department of Justice and Department of Education standardized the process with an attestation form, objective criteria, and presumptions for older, disabled, or long-unemployed borrowers, making discharge more attainable than before.

The legal starting point: why student loans are different

In a typical Chapter 7 or Chapter 13 case, most unsecured debts are discharged automatically once the case concludes. Student loans are carved out by Section 523(a)(8) of the Bankruptcy Code, which provides that educational loans and benefits are not discharged “unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents.”

Three features make this exception unusually demanding. First, the exclusion is self-executing: your discharge order will not touch your student loans unless you affirmatively seek a hardship determination. Second, you must file a separate lawsuit, called an adversary proceeding, against your loan holder inside the bankruptcy case, which means additional filings, evidence, and often a trial. Third, the burden of proof is on you, the borrower, to establish undue hardship by a preponderance of the evidence. If you are weighing bankruptcy generally, our comparison of Chapter 7 vs Chapter 13 explains which chapter fits different situations before the student loan question even arises.

Congress never defined “undue hardship” in the statute, so courts built their own frameworks. Two dominate.

The Brunner test, prong by prong

Most federal circuits use the test from Brunner v. New York State Higher Education Services Corp., a 1987 Second Circuit decision. To win under Brunner, you must prove all three of the following:

1. You cannot maintain a minimal standard of living if forced to repay. The court compares your current income against your reasonably necessary expenses. This is not about comfort; it is about whether loan payments would push you below a basic standard of living for you and your dependents. Under the 2022 federal guidance discussed below, government attorneys measure this using IRS collection financial standards for allowable expenses, which brings consistency to what used to be a highly subjective inquiry.

2. Additional circumstances indicate this state of affairs is likely to persist for a significant portion of the repayment period. This is often the hardest prong. Courts look for reasons your financial situation will not improve: a chronic medical condition, a disability, advanced age, a lack of marketable job skills, or a long history of low earnings. Temporary setbacks, like a short spell of unemployment, rarely satisfy this element on their own.

3. You made good faith efforts to repay the loans. Courts examine your payment history, whether you explored options like income-driven repayment plans, and whether you tried to maximize income and minimize expenses. Importantly, enrolling in an income-driven plan is evidence of good faith, but failing to enroll is not automatically bad faith if you could not afford the payments anyway. Choosing among income-driven repayment plans before filing can therefore strengthen this prong.

The totality-of-the-circumstances alternative

Courts in the Eighth Circuit, which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota, reject Brunner in favor of a “totality of the circumstances” test from In re Long. That test weighs your past, present, and reasonably reliable future financial resources, your reasonably necessary living expenses, and any other relevant facts and circumstances.

In practice, the two tests often lead to similar outcomes because they examine the same underlying facts: income, expenses, health, age, and effort. But the totality test gives judges more flexibility to consider the whole picture rather than treating each Brunner prong as a separate hurdle. If you live in an Eighth Circuit state, your attorney will frame your case around the totality factors rather than the Brunner checklist.

The 2022 guidance that changed the government’s posture

For years, the practical obstacle was not just the legal test but the opponent. The Department of Education routinely contested discharge cases aggressively, and the cost of fighting the federal government deterred all but the most desperate borrowers. On November 17, 2022, the Department of Justice and the Department of Education issued joint guidance that changed how federal attorneys handle these cases.

The guidance created a standardized process built around a borrower attestation form. Instead of full-scale litigation in every case, borrowers document their finances once, and DOJ attorneys evaluate the claim against objective criteria that map onto the undue hardship factors used in both Brunner and totality jurisdictions:

• Present inability to pay, measured by comparing income against allowable expenses under IRS standards, with room for projected expenses needed to reach a minimal standard of living.
• Likely persistence of the hardship, with rebuttable presumptions that help certain borrowers: those age 65 or older, those with a disability expected to last at least five years, and those unemployed or underemployed for at least five of the past ten years.
• Good faith efforts, evaluated through payment history and engagement with repayment options rather than a demand for perfection.

Where the facts support discharge, the guidance directs government attorneys to stipulate to the facts and recommend discharge to the court, including partial discharges where appropriate, rather than forcing a trial. The guidance does not change the statute, and courts still apply their circuit’s test, but it transformed the government’s default posture from reflexive opposition to structured evaluation.

The early results were striking. In the first ten months under the new process, 632 cases were filed, a sharp increase from prior years, and the Department reported that 99 percent of borrowers who went through the process received either a full or partial discharge. The process is now used in the overwhelming majority of federal student loan discharge cases.

A hypothetical walkthrough of the three prongs

Consider a hypothetical borrower, Elena, age 61, who owes $58,000 in federal student loans from a degree she never completed. A back injury limits her to part-time work earning $1,850 a month. Her documented necessary expenses, rent, food, transportation, medication, total $1,950 a month. Her doctor states the condition is permanent.

On prong one, her allowable expenses exceed her income even before any loan payment, satisfying the minimal-standard-of-living element. On prong two, her age, permanent medical limitation, and part-time earnings history support persistence, and she also falls near the guidance’s presumptive categories. On prong three, she made payments for six years when she was working full time and later enrolled in an income-driven plan, demonstrating good faith. Under the 2022 process, Elena would complete the attestation form, a DOJ attorney would evaluate it against these criteria, and the government could stipulate to discharge without a trial. A borrower half her age with a temporary income dip and no payments on record would face a much harder path, which is exactly the distinction the test is designed to draw.

What the process actually looks like

The sequence runs inside your bankruptcy case, not instead of it. First, you file for Chapter 7 or Chapter 13 as you normally would. Second, you or your attorney file an adversary complaint against the loan holder, formally asking the bankruptcy court for an undue hardship determination. Third, for federal loans, you complete the DOJ attestation form documenting income, expenses, health, and repayment history. Fourth, the government’s attorneys review the attestation and either agree to stipulated facts recommending discharge, negotiate a partial discharge, or proceed to litigation. Throughout, the broader question of whether bankruptcy makes sense for your whole financial picture is worth examining separately, which is why many borrowers start with our overview of debt consolidation vs settlement vs bankruptcy before committing to a chapter.

One more practical note: most private student loans that qualify as education loans under the tax code are subject to the same undue hardship standard, so the analysis above generally applies to them too. Federal loans are the focus of the 2022 guidance, but the statutory test covers both.

Frequently asked questions

Can private student loans be discharged in bankruptcy?

Usually only through the same undue hardship process. Most private student loans fall within Section 523(a)(8) as qualified education loans, so the Brunner or totality test applies. The 2022 DOJ guidance, however, governs federal loans specifically.

Does the adversary proceeding cost extra?

Yes, in most cases. It is a separate lawsuit requiring its own filing fee and, realistically, attorney time beyond the base bankruptcy case. Discuss the total cost with your attorney upfront, because it can be substantial relative to smaller loan balances.

What happens if I lose the adversary proceeding?

Your student loans survive the bankruptcy, and you still owe them in full. Your other dischargeable debts are still discharged, and you can pursue alternatives afterward, such as income-driven repayment or, for federal loans, Public Service Loan Forgiveness if you qualify.

Is the process different in Chapter 13?

The undue hardship standard is the same, but the timing differs. In Chapter 7 the adversary proceeding often runs alongside the relatively quick case. In Chapter 13, which involves a three-to-five-year repayment plan, the adversary proceeding may be filed during or after the plan, and strategy varies by district.

Should I attempt this without a lawyer?

It is technically possible but genuinely inadvisable for most borrowers. The adversary proceeding involves federal litigation procedure, evidentiary burdens, and a well-resourced opposing party. At minimum, consult a bankruptcy attorney who has handled post-2022 student loan discharges in your circuit.

The Bottom Line

Student loans are no longer the untouchable debt they were once assumed to be, but they are still the hardest common debt to discharge in bankruptcy. The undue hardship standard demands proof across three dimensions: present inability, likely persistence, and good faith. The 2022 federal guidance did not lower that bar, but it made the process fairer, more predictable, and less punishing to attempt. If your loans are genuinely unpayable and likely to stay that way, the adversary proceeding is a real door. Walk through it with documentation, realistic expectations, and experienced counsel. If you are still mapping your overall debt strategy, our Start Here guide walks through the full journey from first assessment to payoff.

Sources

1. U.S. Department of Education, Federal Student Aid, Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings, summarizing the November 2022 DOJ/ED guidance, the Brunner and totality tests, IRS expense standards, and persistence presumptions.
2. U.S. Bankruptcy Court, District of New Hampshire, The College Conundrum: Student Loans, Tuition and Bankruptcy, on 11 U.S.C. 523(a)(8), the adversary proceeding requirement, and the burden of proof.
3. Orrick, DOJ and DOE share success after first year of student loan bankruptcy discharge process (Nov. 17, 2023), reporting 632 cases filed in the first ten months with 99 percent receiving full or partial discharges.