Student Loans Are Dischargeable in Bankruptcy: What Most Borrowers Are Never Told

If you have student loan debt and were told “student loans can never be discharged in bankruptcy,” that information is outdated, incomplete, and often flat-out wrong.

Student loans can be discharged in bankruptcy, and in recent years, courts, bankruptcy judges, and even the U.S. Department of Education have made it significantly easier for borrowers to qualify.

The real problem is that most people are never told how.

The Biggest Myth in Bankruptcy: “Student Loans Are Never Discharged”

For decades, borrowers were discouraged from even trying. Many bankruptcy attorneys avoided student loan cases entirely, telling clients it was “impossible.”

That is no longer true.

Today:

• Bankruptcy courts are approving full discharges

• Others are granting partial discharges

• Many borrowers are receiving settlements or reduced balances

• Some are getting interest wiped out or payments permanently lowered

The law has not changed — but how it is applied absolutely has.

How Student Loans Can Be Discharged in Bankruptcy

Student loans are discharged through a special lawsuit inside your bankruptcy case called an adversary proceeding.

To win, you must show “undue hardship.”

Courts typically look at:

• Your income and future earning ability

• Your monthly expenses and dependents

• Your health, age, and work limitations

• Your good-faith efforts to repay

This is not about being broke forever. It is about proving that repayment is unrealistic and unjust under your circumstances.

Why Student Loan Discharges Are Increasing

Several major shifts have changed the landscape:

1. Federal Policy Changes

The Department of Education now:

• Reviews cases more cooperatively

• Agrees to settlements more often

• Supports discharge in appropriate cases

2. Judges Are Applying the Law More Fairly

Courts increasingly recognize:

• Lifelong debt traps

• Ballooning balances due to interest

• Borrowers who did everything “right” and still lost

3. More Attorneys Are Finally Taking These Cases

When handled correctly, student loan discharge cases are winnable.

You May Qualify for a Student Loan Discharge If:

You may have a strong case if you:

• Are struggling despite full-time work

• Have medical issues or disabilities

• Are supporting children or family members

• Are near retirement or on a fixed income

• Have loans that have grown instead of shrunk

• Have been in income-driven repayment for years

Even borrowers who earn “too much” on paper may still qualify.

Chapter 7 vs. Chapter 13 and Student Loans

Chapter 7

• Fast process (usually 3–4 months)

• Can fully discharge student loans through litigation

• Best for borrowers with limited income or assets

Chapter 13

• Allows long-term relief while the case is pending

• Can pause collections for 3–5 years

• Often used strategically to build a discharge case

The best option depends on your financial picture — and timing matters.

Why Most Borrowers Lose (and Why You Don’t Have To)

Many student loan cases fail because:

• The case was never filed at all

• Evidence was incomplete

• The argument was poorly presented