For decades, student loans were viewed as the “untouchable” debt in bankruptcy. Most debtors, and many attorneys, assumed that student loans could never be discharged absent truly extraordinary circumstances. While student loans are still treated differently from ordinary unsecured debt, the landscape has changed significantly in recent years as a Chapter 7 bankruptcy attorney can explain. In 2026, student loan discharge litigation is more active, more realistic, and more successful than many practitioners realize.
Student Loan Bankruptcy Laws
Under 11 U.S.C. § 523(a)(8), student loans are generally non-dischargeable unless repaying the debt would impose an “undue hardship” on the debtor and the debtor’s dependents. The Bankruptcy Code does not define “undue hardship,” leaving courts to develop their own standards. Most courts, including those within the United States Court of Appeals for the Eleventh Circuit, apply the well-known “Brunner test.” Under that test, a debtor must generally prove three things:
- The debtor cannot maintain a minimal standard of living if forced to repay the loans;
- The financial hardship is likely to persist for a significant portion of the repayment period; and
- The debtor has made good-faith efforts to repay the loans.
Bankruptcy And Student Loan History
Historically, courts often interpreted this standard very narrowly. Debtors were routinely told that only borrowers facing catastrophic disability, permanent unemployment, or extreme poverty had any realistic chance of success. As a result, relatively few debtors even attempted to seek discharge of student loans through bankruptcy.
That began to change in 2022, when the United States Department of Justice and the United States Department of Education implemented new guidance for handling federal student loan discharge litigation in bankruptcy. As our friends at Eric Wilson Law, LLC can share, the guidance created a more standardized and borrower-friendly process for evaluating undue hardship claims.
Under the current process, debtors seeking discharge of certain federal student loans complete an attestation form detailing income, expenses, assets, employment history, medical issues, and repayment efforts. Government attorneys then evaluate whether the facts support a recommendation for full or partial discharge. In many cases, the government now stipulates to facts supporting undue hardship rather than aggressively litigating every adversary proceeding. One industry professional in the student loan field claims that approximately 87% of filed Adversary Proceedings going through the attestation process resulted in complete or partial discharges for Debtor Borrowers.
The practical impact has been substantial. Recent reporting and practitioner analysis suggest that debtors pursuing discharge actions under the updated guidance are achieving favorable outcomes at dramatically higher rates than in prior years. While student loans remain difficult to discharge compared to ordinary unsecured debt, bankruptcy relief is no longer the near impossibility many once believed it to be.
Another important development is the increasing distinction between federal and private student loans. Federal Direct Loans and Direct Consolidation Loans are currently the primary focus of the DOJ/Department of Education guidance process. Private student loans, however, remain more complicated. Borrowers holding private loans must still typically litigate undue hardship claims without the benefit of the streamlined federal review process.
At the same time, courts around the country have shown increasing willingness to scrutinize whether certain “private student loans” actually fall within § 523(a)(8) at all. Some courts have held that loans exceeding qualified educational expenses or loans issued outside traditional educational programs may not qualify for the special non-dischargeability protections of the Bankruptcy Code. This has created additional litigation opportunities for debtors and bankruptcy practitioners.
The broader student loan environment has also increased pressure on the bankruptcy system. Pandemic-era payment pauses and collection suspensions have ended, and federal collection activity has resumed. Millions of borrowers have fallen back into delinquency or default status as repayment obligations restarted. Wage garnishments, tax refund offsets, and other collection remedies are again becoming common. As financial pressure grows, more borrowers are exploring bankruptcy as a legitimate form of student loan relief.
Chapter 13 cases continue to play an important role even when loans are not ultimately discharged. Although student loans generally survive Chapter 13 absent an undue hardship determination, the automatic stay can temporarily halt collections, wage garnishments, and offsets while debtors reorganize their finances. For some borrowers, Chapter 13 provides breathing room and an opportunity to stabilize financially before pursuing additional relief options.
Despite these developments, many misconceptions persist. A surprising number of debtors, and even attorneys, still believe student loans are categorically non-dischargeable. That is no longer accurate. The modern reality is more nuanced. Discharge remains challenging, but viable cases exist, particularly for borrowers facing long-term financial hardship, chronic medical issues, advanced age, limited earning capacity, or prolonged inability to repay despite good-faith efforts.
In 2026, the state of student loans in bankruptcy can best be described as evolving. The legal standards remain demanding, but the practical pathway to relief has become far more realistic than it was even a few years ago. For financially distressed borrowers burdened by overwhelming educational debt, bankruptcy is no longer a dead end; it is increasingly becoming part of the conversation. If you are curious about your bankruptcy options with regards to student loans, contact an attorney near you.
