Many borrowers have, at some time or another, heard the phrase: “You can’t get rid of student loans in bankruptcy.” That line has been repeated so often that it feels like a hard rule. But the truth is more complicated. While student loans are traditionally harder to discharge than credit cards or medical bills, it is possible under certain conditions.
This guide explains how bankruptcy interacts with student loans, what “undue hardship” means in real terms, the difference between Chapter 7 and Chapter 13, and how courts look at federal versus private loans.
Common Myths About Student Loan Bankruptcy
Borrowers often avoid even looking into filing bankruptcy for student loans because of misinformation. Here are a few of the most persistent myths:
- “It’s impossible to get rid of student loans in bankruptcy.”
Not true. The process is harder, but cases are regularly won. Success often hinges on demonstrating hardship clearly and meeting the court’s test. (5) - “You’ll automatically lose your professional license.”
Filing bankruptcy doesn’t mean losing credentials. Certain careers may have disclosure requirements, but it doesn’t ban you from working. - “If you try and fail, you’ll be stuck forever.”
Even if loans aren’t discharged, bankruptcy can still help by pausing collections or restructuring other debts. Some borrowers later succeed after circumstances worsen or laws change. - “Bankruptcy will ruin your credit permanently.”
While bankruptcy does impact credit, most borrowers considering it already have damaged scores. Over time, credit can be rebuilt, and many people find their finances improve once debt stress is reduced.
Student Loans in Bankruptcy: Not Automatic, But Possible
The official Federal Student Aid website confirms (2): federal student loans can be discharged in bankruptcy—but it’s not automatic. You must go through a specific process to prove undue hardship. Starting in November 2022, the Department of Justice and Department of Education rolled out a more transparent, borrower-friendly system for handling student loan discharge requests in bankruptcy. Since then, filings have increased, and between November 2022 and March 2023, 98% of decided cases resulted in full or partial relief. (3) This shows the system is delivering more equitable outcomes.
A 2025 detailed analysis by Roitburg and Miller further explains how the 2022 DOJ Guidance fundamentally restructured the process by introducing a standardized attestation form and consistent review criteria. They note that this change replaced a fragmented, inconsistent system and has already produced high rates of relief, while showing signs that it will continue across political administrations (4).
Why Education Loans Are Different in Bankruptcy
Bankruptcy laws treat student loans as a special category of debt. Unlike most unsecured debts, they aren’t automatically wiped out when you file. To eliminate them, you have to prove something extra: that repaying your loans would cause “undue hardship.”
This higher standard comes from a mix of federal statutes and decades of court cases. Judges apply legal tests to decide if your situation is extreme enough to qualify. That’s why two people with similar balances can end up with very different outcomes depending on their income, expenses, and circumstances.
These myths matter because they prevent people from even asking the right questions. When you search “can you file bankruptcy on student loans” or “is it even worth trying?”, the honest answer is: it depends on your facts, but it’s not impossible.
The “Undue Hardship” Standard
So what exactly counts as undue hardship? According to a Department of Justice guidance document, (1) courts assess undue hardship using two main tests:
- The Brunner Test
This is the most common test. To pass it, you usually have to show three things:- You cannot maintain a minimal standard of living if forced to repay your loans.
- Your financial situation is likely to continue for a significant part of the repayment period.
- You’ve made good faith efforts to repay the loans.
- The Totality of the Circumstances Test
Some courts take a broader view. Instead of a three-part checklist, they look at the overall facts of your case—income, expenses, dependents, health issues, repayment history—and weigh whether repayment would be an unreasonable burden.
Both tests are tough, but not impossible. People have succeeded in discharging student loans when they could demonstrate long-term inability to pay, medical limitations, or other hardships that went beyond temporary financial struggles.
Chapter 7 vs. Chapter 13 in Student Loan Cases
Bankruptcy comes in different forms, and which chapter you file under affects how student loans are handled:
- Chapter 7 (Liquidation Bankruptcy)
In Chapter 7, most unsecured debts can be wiped out quickly. Student loans, however, still require proving undue hardship through a separate legal process. If you qualify, Chapter 7 can be the fastest route to student loan debt relief. - Chapter 13 (Repayment Plan Bankruptcy)
Chapter 13 sets up a three- to five-year repayment plan based on your income. While student loans aren’t automatically discharged at the end, this chapter can give you breathing room by lowering payments during the plan. It can also position you to argue undue hardship as part of the process.
Choosing between Chapter 7 and Chapter 13 depends on your income, assets, and financial goals. For some borrowers, Chapter 13 offers structure and protection; for others, Chapter 7 provides a clearer path to eliminating debt.
Federal vs. Private Education Loans in Bankruptcy
One of the first distinctions courts and attorneys make is whether your loans are federal or private, because they can be treated differently in bankruptcy. (6)
- Federal Student Loans
These loans (like Direct, PLUS, and Stafford) are backed by the government. Courts are usually more cautious about discharging them, because federal repayment programs already exist—such as Income-Driven Repayment (IDR) plans or Public Service Loan Forgiveness (PSLF). Judges may ask why those options aren’t sufficient before considering discharge. Still, there are cases where federal loans have been wiped out, especially when repayment programs don’t meaningfully reduce the hardship. - Private Student Loans
Private loans are issued by banks or lenders without the same government safety nets. In recent years, some courts have been more open to discharging them in bankruptcy, especially when the loans don’t meet the strict legal definition of a “qualified education loan.” For example, some loans used for non-accredited schools or beyond the cost of attendance may be treated more like consumer debt, making them easier to challenge.
Because the laws vary by jurisdiction, and private lenders often contest discharge aggressively, outcomes differ widely. Borrowers often ask questions like “can you file bankruptcy on private student loans” or “is it easier to discharge private student loans”—and the answer depends on the specifics of your case.
How Courts Decide Student Loan Bankruptcy Cases
When a borrower files bankruptcy and asks the court to consider student loan discharge, it isn’t automatic. It usually requires filing what’s called an adversary proceeding—a lawsuit within the bankruptcy case that specifically challenges the loans. From there, the court looks at evidence about your finances, efforts, and prospects.
Judges weigh several key factors:
- Income vs. Expenses
Courts analyze your budget to see whether loan payments leave you below a minimal standard of living. Documentation is critical here—pay stubs, bills, medical costs, childcare expenses, and more. - Future Outlook
A temporary hardship (like a short period of unemployment) might not be enough. Judges want to know whether your financial difficulty is likely to continue for years, based on age, health, employment prospects, or dependents. - Good Faith Efforts
Courts look for evidence that you’ve tried to handle the debt responsibly. This could include making some payments, seeking deferments, consolidating, or exploring repayment programs. Even if those efforts didn’t solve the problem, showing you made them matters.
Outcomes vary widely by judge and jurisdiction. Some courts lean toward strict interpretation of hardship; others apply a more flexible view. That’s why many borrowers have questions like “how do courts decide student loan bankruptcy” or “what judges look for in undue hardship cases.” The answer is: every detail of your financial life could come into play.
Timeline and Costs of Academic Loan Bankruptcy
Another frequent question: “How long does it take to file bankruptcy on student loans?” The answer depends on whether you’re filing Chapter 7 or Chapter 13, and whether you pursue an adversary proceeding.
- Chapter 7 Timeline
The bankruptcy itself can wrap up in a few months. But if you add an adversary proceeding for student loans, the case may take longer, sometimes stretching into a year or more as the court reviews evidence and holds hearings. - Chapter 13 Timeline
Chapter 13 runs on a three- to five-year repayment plan. Borrowers may use this time to stabilize finances, and in some cases, they’ll file an adversary proceeding during or after the plan. That means the timeline is longer, but it can also provide more breathing room.
Costs vary as well. Bankruptcy comes with court filing fees and attorney fees, and an adversary proceeding adds to the expense. For many borrowers, though, the cost is weighed against the potential of eliminating tens of thousands in loans or reducing pressure from creditors.
That’s why so many people wonder “how much does student loan bankruptcy cost” or “is it worth it to file bankruptcy for student loans.” The truth: it’s not a quick or cheap fix, but for some, it can be life-changing relief.
Frequently Asked Questions (FAQ) About Student Loan Bankruptcy
Q: Can private student loans be discharged in bankruptcy?
Yes, but it depends. Some private loans don’t legally qualify as “educational loans” under bankruptcy law—especially if they were used for non-accredited schools, living expenses beyond cost of attendance, or bar exam prep. Courts may treat these like personal loans, which can make them easier to challenge. Others are harder, but still possible with an undue hardship showing.
Q: Does bankruptcy affect my cosigner?
If someone cosigned your private student loan, bankruptcy can impact them. In Chapter 7, the cosigner may still be responsible unless the loan itself is discharged. In Chapter 13, there’s usually a “co-debtor stay,” which temporarily protects the cosigner during the repayment plan. This is a major concern for parents or relatives who helped, and it’s a frequent reason people wonder “does bankruptcy protect cosigners on student loans.”
Q: What if I’ve already tried repayment programs?
Trying programs like Income-Driven Repayment (IDR) or consolidation doesn’t prevent you from seeking discharge in bankruptcy. In fact, it can help demonstrate good faith. Courts often look more favorably on borrowers who explored every option before filing.
Q: Do I have to be completely “broke” to qualify?
No. Judges don’t require you to be destitute—meaning completely without money or resources. Instead, they look at whether paying loans would prevent you from maintaining a basic standard of living.
If repayment would mean constant trade-offs on essentials like food, housing, or healthcare, that can meet the hardship standard even if you have some income.
Q: Doesn’t filing bankruptcy “ruin” my future financial life?
Bankruptcy does appear on your credit report for years, but it doesn’t permanently block financial recovery. Many borrowers start rebuilding credit within a year or two. For people crushed by unpayable student debt, bankruptcy can open the door to a healthier long-term financial path.
Final Thoughts
The big question at the heart of all these queries is simple: “Can I get rid of my student loans through bankruptcy?” The answer itself is rarely simple, but it isn’t the blanket “no” that many people believe. Whether relief comes through full discharge, a structured repayment plan, or a partial solution, understanding how the law works is the first step.
Student loan bankruptcy is a complex process with moving parts—federal vs. private loans, Chapter 7 vs. Chapter 13, hardship standards, court interpretations, and costs. But knowing the landscape can turn uncertainty into clarity, and for some borrowers, into real financial relief.
The Independence Law Firm
If you’re overwhelmed by student debt and wondering whether bankruptcy could provide relief, the most important step is getting a clear, informed assessment of your situation. The Independence Law Firm offers a confidential, no-obligation case evaluation to help you understand your options. Our attorneys will review your financial picture, explain how current hardship standards apply, and outline what Chapter 7 or Chapter 13 could mean for you.
There is no pressure to commit—just straightforward answers to your questions from professionals who understand the complexity of student loan bankruptcy.
Schedule your free evaluation online and begin moving toward financial independence.
Sources
- U.S. Department of Justice. Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation. Civil Division, Nov. 17, 2022. Available at: https://www.justice.gov/d9/pages/attachments/2022/11/17/student_loan_discharge_guidance_-_guidance_text_0.pdf
- Federal Student Aid (U.S. Department of Education). Bankruptcy and Student Loans. Accessed Aug. 2025. Available at: https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy
- U.S. Department of Justice & U.S. Department of Education. Justice Department and Department of Education Announce Continuing Success of Student Loan Bankruptcy Discharge Program. Nov. 16, 2023. Available at: https://www.justice.gov/archives/opa/pr/justice-department-and-department-education-announce-continuing-success-student-loan
- Roitburg, Igor, and Brian E. Miller. Discharging Student Loans in Bankruptcy. The Independence Law Firm, July 10, 2025. Available at: https://theindependencelaw.com/discharging-student-loans-in-bankruptcy/
- Consumer Financial Protection Bureau. Busting Myths About Bankruptcy and Private Student Loans. Jan. 2023. Available at: https://www.consumerfinance.gov/about-us/blog/busting-myths-about-bankruptcy-and-private-student-loans/
- Federal Register (Consumer Financial Protection Bureau). Unfair Billing and Collection Practices After Bankruptcy Discharges of Certain Student Loans. Vol. 88, No. 56, Mar. 23, 2023. Available at: https://www.federalregister.gov/documents/2023/03/23/2023-06002/unfair-billing-and-collection-practices-after-bankruptcy-discharges-of-certain-student-loans
