Discharging Student Loans in Bankruptcy Gets a Little Easier

Discharging student loans in bankruptcy is famously “nearly impossible.” In the past, many debtors and bankruptcy attorneys didn’t even file the adversary proceedings necessary to get student loans discharged. The bar was so high that it was almost always wasted time, energy and money.

That changed in late 2022.

How Did the Law Change on Discharging Student Loan Debt?

Technically, the law didn’t change. In November of 2022, the Department of Justice (DOJ) and the Department of Education (DOE) issued new guidance that created a clearer, more predictable path for borrowers seeking to discharge federal student loans in bankruptcy. Instead of a drawn-out trial over what hardship means, borrowers can now complete an attestation form to be reviewed by DOJ lawyers. The government attorneys apply defined standards when deciding whether to support the discharge, and often agree that some or all student loan debt should be discharged. Cases that would have been dead on arrival a few years ago are now succeeding.

Who May Qualify for Student Loan Discharge

Every case turns on its own facts, but under the current guidelines, you may be a good candidate for student loan discharge if:

• You left school more than 10 years ago
• Your income is at or below the median for your area
• You have federal (government) student loans

Meeting these criteria does not guarantee a discharge, and falling outside them does not automatically rule one out.

You can find more information about the specific factors the DOJ attorneys consider in making their recommendations below. Still, there’s no substitute for knowledgeable guidance. The best way to find out whether you may be eligible to discharge your federal student loans is to talk to an experienced Los Angeles bankruptcy attorney.

Our Partnership with Walker & Walker Law Offices

Borowitz & Clark has partnered with Walker & Walker Law Offices to handle student loan discharge cases for our clients. Attorney Andrew Walker and his team have made this area of law a core focus of their practice and report having discharged more than $10 million in student loan debt for borrowers under the updated guidelines.

In this short video, our own Erik Clark and Attorney Andrew Walker explain the program:

You can read more about the qualifications, the process, and the costs involved at https://bankruptcytruth.com/student-loan-discharge/.

The Legal Standard for Discharging Student Loan Debt in Bankruptcy

Federal student loan debt can generally be discharged in bankruptcy only if the debtor shows that repaying the debt would impose undue hardship on the debtor and/or their dependents. It is the debtor’s responsibility to initiate proceedings within the bankruptcy case to discharge student loan debt, and to prove the hardship exists. 

U.S. Bankruptcy Courts are split on their approaches to determining undue hardship. In Los Angeles and throughout the 9th Circuit (which includes all of California and several other states), bankruptcy courts apply the Brunner test. 

With the new guidance, California student loan debtors will still have to pass this three-pronged test. But, the way DOJ attorneys are instructed to interpret these requirements and treat the debtor’s situation have changed. 

Current Guidance for Student Loan Discharge Litigation

The 2022 guidance altered the way DOJ attorneys are instructed to look at each of the three factors above.

Minimal Standard of Living

Under the new guidance, DOJ attorneys are instructed to begin by determining the debtor’s allowable expenses under IRS standards. While these same standards are used in means testing, the way they’re used in the undue hardship assessment is slightly different. 

The DOJ attorney compares the debtor’s allowable expenses with gross income to determine whether the debtor has money left over for student loan payments. If the total of allowable expenses is greater than the debtor’s gross income, then the attorney should conclude that the debtor meets this requirement.

The guidance is more generous to debtors than it may appear, because the allowable expenses are based on national or local standards, not actual expenses. For example, if the debtor’s actual housing expense is less than the applicable standard, they still get to claim the full standard amount. On the other hand, if expenses are higher than the applicable standards, they’ll have an opportunity to explain why and potentially get to claim the full amount they’re actually spending. In some cases, expenses outside the standard list may also be considered.

For student loan borrowers considering seeking a discharge in bankruptcy, this clearer starting point will make it easier to predict whether the debtor may be eligible to discharge student loan debt. 

Persistence of Debtor’s Financial Situation

Many student loan borrowers face financial hardships that may not persist–especially if they’ve only recently graduated and haven’t yet established the earnings their degrees may later justify. One of the justifications for the harsh rules for student loan discharge is preventing recent graduates with lower incomes or who haven’t yet found work in their fields from discharging student loan debt, then going on to lucrative careers that would have allowed them to repay their loans. 

While these presumptions are rebuttable–meaning the DOJ could argue against them–evidence is required to overcome the presumption. It is not enough that the DOJ lawyer believes you might be able to resume payments at some point.

If none of the above presumptions applies, the debtor may still establish future inability to pay through any relevant evidence. 

Good Faith Efforts to Pay

The good faith efforts prong has been a significant obstacle for student loan borrowers who might otherwise have qualified for discharge, in part because the assessment has been both harsh and somewhat subjective. 

In 2021, the Second Circuit Court of Appeals–which created the Brunner test in an earlier case–overturned a bankruptcy court’s discharge of a student loan debt. In that opinion, the court referenced everything from the debtor’s decision to move during the repayment period to having left the practice of law. 

The new guidance makes it clear that the good faith inquiry should not be used by courts or by DOJ attorneys to “impose their own values on a debtor’s life choices.” 

However, evidence that the borrower manufactured their financial circumstances to avoid repayment, committed fraud in securing the loans, or demonstrated disinterest in repayment may support a finding that the debtor didn’t make a good faith effort, even if they took one or more of the actions listed above. 

What Does This Mean for Student Loan Debtors? 

In late 2025, CNBC reported that the success rate for debtors filing adversary proceedings to discharge their student loans had increased to 87%. That’s a promising number, particularly when you consider the increase in attempts to discharge student loans. A study published in the Emory Bankruptcy Developments Journal in 2025 revealed that in the 23 months following issuance of the new guidance, the number of adversary proceedings filed to discharge student debt more than tripled.

In other words, the success rate for student loan discharge has significantly increased even as people with less dire circumstances have begun to seek discharge.

The bar is still high compared with discharge of other types of unsecured debt. But, if your student loan debt is truly overwhelming, consider speaking with a bankruptcy attorney about how these changes may impact you. You may qualify for discharge even if you talked with a bankruptcy lawyer in the past and were told you were not eligible. 

The veteran bankruptcy lawyers at Borowitz & Clark offer free consultations to people in and around Los Angeles, California. To schedule yours, just call 877-439-9717 or fill out the contact form on this page.