Student loans are almost never discharged in bankruptcy, but there are narrow exceptions and other routes that may help

Federal student loans and most private student loans survive bankruptcy. When you file for bankruptcy — whether Chapter 7 (liquidation) or Chapter 13 (repayment plan) — your student loan debt remains. The loans do not disappear, and you still owe them after the bankruptcy case closes. This is different from credit card debt, medical bills, or personal loans, which bankruptcy can wipe out.

The reason is a 1976 federal law that made student loans non-dischargeable unless repaying them causes "undue hardship." Courts interpret this standard very strictly, and very few borrowers meet it. You must prove not only that you cannot pay now, but that your circumstances are unlikely to improve enough to repay in the future. Even then, you may only discharge part of the loan, not all of it.

Key Takeaways

  • Bankruptcy does not erase federal or private student loans unless you prove undue hardship in court, which requires showing you cannot maintain a minimal standard of living while repaying.
  • The undue hardship test is so difficult that fewer than 1 percent of bankruptcy filers even attempt it, and most who do are denied.
  • If you have federal student loans, income-driven repayment plans and Public Service Loan Forgiveness may lower your payments or forgive the balance without bankruptcy.
  • Private student loans have no forgiveness programs, but bankruptcy may still be worth exploring if you have both private and federal loans and other unsecured debt.
  • A bankruptcy attorney can review your specific situation and tell you whether undue hardship is realistic in your case.

What "undue hardship" means and why it is hard to prove

Courts use the Brunner test (named after a 1987 case) or a similar standard to decide whether repaying student loans causes undue hardship. You must show three things: you cannot maintain a minimal standard of living if you repay; your situation is likely to continue for most of the repayment period; and you have made a good-faith effort to repay before filing for bankruptcy.

The first part — "minimal standard of living" — is the barrier most borrowers cannot cross. It does not mean you will be uncomfortable or have to cut back. It means you cannot afford basic necessities: food, shelter, utilities, and medicine. If you have any income above what covers these basics, courts typically say you can pay something toward the loans. A person working part-time, receiving disability benefits, or living with family support often fails this test because the court finds they could redirect some money to student loans.

The second part requires you to show that your hardship is permanent or long-term, not temporary. If you are unemployed now but have job prospects, or if you are young and your earning potential is high, courts assume your situation will improve. Borrowers who are older, disabled, or in fields with no job growth have a better chance, but even then the bar is high.

The third part — good-faith effort — means you must show you tried to repay before bankruptcy. This includes making payments when you could, exploring deferment or forbearance, and looking into income-driven plans. If you ignored the loans or made no attempt to manage them, courts will deny the hardship claim.

How courts have ruled on undue hardship cases

In practice, undue hardship discharge is rare. Courts have denied hardship claims from borrowers with serious disabilities, chronic illnesses, and very low incomes. A borrower with cerebral palsy and no job prospects was denied. A borrower receiving Supplemental Security Income (SSI) was denied. A borrower with a terminal illness was denied.

Courts have granted discharge in a small number of cases, usually involving older borrowers with permanent disabilities, no realistic chance of employment, and already-maxed-out income-driven repayment plans. Even in those cases, judges sometimes discharge only part of the loan or impose conditions.

The rarity of success has led some courts to reconsider the Brunner standard. In 2023, the U.S. Court of Appeals for the Eighth Circuit adopted a more flexible test that does not require proof of permanent hardship, only that repayment would prevent you from maintaining a minimal standard of living. Other circuits still use Brunner or similar strict tests. Where you live and which court hears your case affects your chances.

Federal student loans and alternatives to bankruptcy discharge

Before pursuing undue hardship in bankruptcy, borrowers with federal student loans should explore other options. Income-driven repayment plans cap your monthly payment at 10 to 20 percent of your discretionary income, which can lower payments to $0 if your income is very low. After 20 to 25 years of payments (or fewer if you work in public service), the remaining balance is forgiven.

Public Service Loan Forgiveness (PSLF) forgives the entire remaining balance after 120 may have access to payments if you work for a government agency or a nonprofit organization. The payments do not have to be large — they just have to be made on time while you are employed in a may have access to job. This program has forgiven billions of dollars in recent years after the Department of Education loosened the rules.

Closed School Discharge erases loans if your school closed while you were enrolled or shortly after you withdrew. Borrower Defense to Repayment may discharge loans if your school defrauded you or violated state law. These are not bankruptcy, but they are ways federal loans can be forgiven outside the normal repayment process.

If you become permanently and totally disabled, you may be able to discharge federal loans through the Total and Permanent Disability (TPD) discharge program without filing for bankruptcy. You must provide medical evidence or documentation from the Department of Veterans Affairs or Social Security Administration.

Private student loans and bankruptcy

Private student loans have no forgiveness programs and no income-driven repayment options. They are issued by banks, credit unions, and other lenders, not the federal government. Because they have no built-in safety nets, some courts have been slightly more willing to discharge private student loans under undue hardship, but the standard is still very high.

If you have both federal and private loans, bankruptcy may be worth considering if you also have other unsecured debt — credit cards, medical bills, personal loans. Bankruptcy can erase those debts, which frees up money you might redirect to student loans. Even if the student loans themselves are not discharged, reducing your other debt can make the loans more manageable.

A bankruptcy attorney can review your mix of debts and tell you whether filing makes sense in your situation. Some borrowers find that discharging $20,000 in credit card debt through bankruptcy, while keeping $50,000 in student loans, improves their overall financial position enough to make the loans payable.

What happens to student loans during bankruptcy

In Chapter 7 bankruptcy, your non-exempt assets are sold and the money is distributed to creditors. Student loans are not sold — they are straightforward not discharged. After the bankruptcy closes, you still owe them in full, and the lender can resume collection efforts. Your credit report will show the bankruptcy, which affects your credit score, but the student loan debt itself does not go away.

In Chapter 13 bankruptcy, you enter a repayment plan lasting three to five years. Student loans are typically not included in the plan — they are left out and you continue to pay them separately. Some borrowers use Chapter 13 to reorganize other debts and free up cash flow, which then goes toward student loans. After the Chapter 13 plan is complete, you still owe the full student loan balance.

Filing for bankruptcy does not automatically stop collection calls or wage garnishment on student loans. However, the bankruptcy filing triggers an automatic stay, which temporarily halts most collection efforts. Once the bankruptcy case closes, collection can resume unless you have successfully discharged the loans or negotiated a settlement.

Steps to take before filing for bankruptcy

If you are considering bankruptcy partly because of student loans, start by contacting your loan servicer or lender. Ask about income-driven repayment, deferment, forbearance, and any forgiveness programs you might be on track for. Many borrowers do not realize they have options that could lower their payments to $0 without bankruptcy.

If you have federal loans, visit StudentAid.gov and log into your account to see which repayment plan you are on and whether you could switch to an income-driven plan. If you have private loans, contact the lender directly — they may offer hardship programs, temporary payment reductions, or interest rate adjustments.

Consult a bankruptcy attorney before filing. An attorney can tell you whether your student loan situation meets the undue hardship standard in your circuit, what your chances are, and whether bankruptcy makes sense given your other debts. Many attorneys offer free initial consultations. If cost is a barrier, legal aid organizations in your state may provide free or low-cost bankruptcy information.

Frequently Asked Questions

Can I discharge only part of my student loan debt in bankruptcy?

Yes, in rare cases where a court finds undue hardship. A judge may discharge some loans while leaving others intact, or discharge a portion of a single loan. This usually happens when you have multiple loans and can show hardship for some but not others, or when the court believes partial discharge is a fair middle ground.

Will filing for bankruptcy stop my student loan payments?

The automatic stay will temporarily halt collection efforts, including wage garnishment and collection calls, but it does not erase the debt. Once the bankruptcy case closes, your loan servicer will resume collection. You will still owe the full balance unless you have successfully discharged the loans or negotiated a settlement.

What if I have both federal and private student loans?

Federal loans are almost never discharged, and private loans are even harder to discharge. However, if you have other unsecured debt like credit cards or medical bills, bankruptcy can erase those, freeing up money to put toward student loans. An attorney can review your full situation to see if bankruptcy improves your overall position.

Does bankruptcy affect my federal student loan forgiveness programs?

Bankruptcy does not disqualify you from income-driven repayment or Public Service Loan Forgiveness, but it will damage your credit score, which may affect other borrowing. If you are on track for PSLF or close to forgiveness under an income-driven plan, bankruptcy may not be necessary and could complicate your path to forgiveness.

How much does it cost to file for bankruptcy?

Filing fees are set by the federal court and currently run $335 for Chapter 7 and $310 for Chapter 13. Attorney fees vary widely by location and complexity, typically ranging from $1,000 to $3,000 or more. Many attorneys offer payment plans. Legal aid organizations may cover costs if your income is low enough.