Many of my clients carrying federal student loan debt believe bankruptcy discharge remains impossible. Recent data reveals a dramatically different reality that borrowers need to understand.
Student Loan Bankruptcy Discharge Success Rates
The success rate for student loan borrowers seeking bankruptcy discharge has jumped to 87 percent in recent years, according to research published in The American Bankruptcy Law Journal. This represents a significant increase from 61 percent in 2017 and double the rate from two decades ago.
The Undue Hardship Standard
Federal student loans can be discharged through bankruptcy by proving "undue hardship"—a three-pronged legal test examining your ability to maintain minimal living standards, whether financial hardship will persist, and your good faith repayment efforts.
Streamlined Attestation Process
Since November 2022, the Department of Justice and Department of Education introduced simplified guidelines for federal student loan discharge. Borrowers complete a 15-page attestation form detailing financial struggles, loan history, and hardship factors. This bankruptcy reform eliminated much of the costly litigation that previously discouraged borrowers from pursuing relief.
The Adversary Proceeding Requirement
Student loan discharge requires filing a separate lawsuit called an adversary proceeding within your bankruptcy case. Despite improved success rates, over 99 percent of student loan debtors filing bankruptcy never request discharge, largely because attorneys mistakenly believe discharge remains impossible.
Private vs. Federal Loans
Federal student loans benefit from the streamlined process, while private student loans require full litigation against lenders without government support, making discharge significantly more challenging.
To protect your financial future when facing overwhelming student loan debt:
1. Consult a bankruptcy attorney experienced in student loan discharge
2. Document your financial hardship thoroughly with tax returns and payment records
3. Explore income-driven repayment plans before pursuing bankruptcy
4. Act promptly—wage garnishment resumed for defaulted borrowers in January 2025
Understanding these bankruptcy options helps borrowers make informed decisions about managing crushing educational debt while rebuilding their financial stability.
