Can bankruptcy get rid of student loans? The honest current answer

Why student loans are different

Congress put student loans on the list of debts that survive bankruptcy unless you prove that repaying them would impose an “undue hardship” on you and your dependents. Proving that requires filing a separate mini-lawsuit inside your bankruptcy case, called an adversary proceeding. Your credit cards and medical bills get discharged without you lifting a finger; your student loans require you to raise your hand.

That extra step, and the old reputation that hardship cases were nearly impossible to win, is why almost nobody tries. Researchers estimate that a tiny fraction of one percent of bankruptcy filers with student loans ever file the extra case.

What changed in 2022

The Department of Justice, which defends these cases for federal loans held by the Department of Education, adopted a standardized process. Instead of fighting every borrower, the government now has you complete an attestation form about your income, expenses, and history with the loans. If your situation meets the criteria (roughly: you can’t pay now, that’s unlikely to change, and you’ve made good-faith efforts in the past), the government recommends discharge instead of opposing it.

The results have been striking. Most borrowers who file are getting full or partial discharges, and when the government recommends discharge, courts almost always agree. The process has continued under the current administration, and as of this writing it remains in effect, though it’s policy rather than law, which means a future administration could change it. That’s a reason to look into it sooner rather than later if it might fit you.

Who has a realistic shot

Signals that a hardship case is worth exploring:

• Your loans have been in default or hardship status for years and your finances haven’t improved
• You’re at or near retirement age, or on a fixed income like disability or Social Security
• A medical condition limits your ability to work
• You’ve been out of school for a long time, the balance has only grown, and repayment would leave you unable to cover basic living expenses

Signals it probably isn’t there yet: you’re recently out of school, your income is decent or climbing, or the payments are painful but possible.

Private loans are a different track

The government’s process covers federal loans held by the Department of Education. Private student loans still require the traditional hardship fight, though they have a quirk in your favor: some private “student” loans don’t actually meet the legal definition of a protected education loan (for example, loans beyond the school’s cost of attendance, or for unaccredited programs), and those discharge like ordinary debt. This is technical, and it’s exactly the kind of thing to ask an attorney to look at.

The bottom line

If student loans are a major part of your debt, don’t let the old myth make the decision for you. Bankruptcy may still make sense even if the loans survive, because clearing everything else can make the loan payments manageable. And if your situation is genuinely hard, the extra case to discharge the loans themselves is more winnable today than it has been in a generation. Just know it doesn’t happen automatically; it happens because you ask.