Do I Qualify to Discharge My Student Loans in Bankruptcy?
Qualifying for student loan discharge in bankruptcy is not a single yes or no question. It is a multi-factor legal analysis that courts apply to your specific financial situation. This article walks through each factor so you can make an honest assessment of where you stand before you file anything.
The short version: you qualify if you can prove undue hardship under 11 U.S.C. § 523(a)(8). Whether you can do that depends on which test your court applies and how your facts line up against it.
THE TEST MOST COURTS USE: BRUNNER
Most federal bankruptcy courts apply the Brunner test, which comes from Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987). To satisfy Brunner, you must prove all three of the following:
1. You cannot maintain a minimal standard of living for yourself and your dependents if forced to repay the loans, given your current income and expenses
2. Your financial situation is likely to persist for a significant portion of the repayment period
3. You have made good faith efforts to repay the loans
All three prongs are required. Satisfying two out of three is not enough. But as explained below, the 2022 DOJ guidance has made each prong meaningfully easier to meet than it was before.
PRONG ONE: CAN YOU MAINTAIN A MINIMAL STANDARD OF LIVING?
This prong asks whether, after paying basic living expenses, you have anything left over to make student loan payments. Courts measure this by comparing your income against your necessary monthly expenses.
Under the 2022 DOJ guidance, the government uses IRS National and Local Standards to evaluate your expense categories — housing, food, transportation, utilities, out-of-pocket healthcare, and similar costs. If your income minus your allowable expenses leaves you unable to make payments under the standard ten-year repayment plan, the first prong is likely satisfied. (DOJ Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation, November 17, 2022 [“DOJ Guidance”]; IRS Collection Financial Standards.)
Courts do not require you to be living in poverty. They require that repayment would push you below a minimal standard of living — meaning you cannot cover reasonable basic needs while also making loan payments. Courts have denied discharge where borrowers were spending on non-essential items while claiming inability to pay. In Hull v. United States Dep’t of Educ., Bankr. E.D. Ky. 2019, the court denied discharge in part because the debtor earned well above the poverty level and spent on items the court characterized as non-essential while making no loan payments.
The practical question for prong one is straightforward: lay out your monthly income and your monthly necessary expenses. If the math does not work, prong one is likely met.
PRONG TWO: IS YOUR SITUATION LIKELY TO PERSIST?
This is historically the hardest prong to satisfy, and the one the 2022 DOJ guidance most significantly changed. Before 2022, some courts described this prong as requiring a “certainty of hopelessness” — language that set an almost impossible standard. Courts increasingly reject that framing, and the 2022 guidance instructs DOJ attorneys to apply a more realistic standard focused on whether the borrower’s financial circumstances are likely to continue for a significant portion of the repayment period.
The guidance identifies specific circumstances that create a rebuttable presumption that your situation will persist (DOJ Guidance, pp. 7-9):
— Your loans have been in repayment status for at least ten years
— You are 65 or older
— You have experienced unemployment for five of the last ten years
— You have a permanent disability or chronic health condition that limits your earning capacity
— You failed to obtain the degree for which the loan was taken out
— Your income is below 225% of the federal poverty line
You do not need to satisfy every factor. Any one of these — or a combination of others such as lack of marketable skills, prolonged underemployment, age-related barriers to re-employment, or significant family obligations — can support this prong.
The government can rebut the presumption. If there is clear evidence that your financial situation is likely to improve substantially — for example, you are completing a degree program or starting a substantially higher-paying job — that evidence weighs against you on this prong. Absent that kind of rebuttal evidence, the presumptions are meaningful.
PRONG THREE: GOOD FAITH EFFORTS TO REPAY
This prong trips up more borrowers than it should, largely because of a persistent misconception: you do not have to have actually made payments to satisfy good faith. You have to have made reasonable efforts.
The 2022 DOJ guidance is explicit on this point: “A debtor will not be disqualified based on past non-payment if other evidence of good faith exists.” The guidance further states that a borrower will not be disqualified for failing to enroll in an income-driven repayment plan where they were deterred from participating or provide a reasonable explanation for non-enrollment. (DOJ Guidance Fact Sheet, November 17, 2022.)
The guidance also instructs DOJ attorneys not to penalize borrowers who failed to engage with repayment programs due to servicer misinformation or administrative errors. The CFPB found that servicers falsely told borrowers their loans were never dischargeable in bankruptcy and wrongfully denied income-driven repayment enrollment — and the guidance expressly states those failures should not count against the borrower’s good faith. (CFPB Supervisory Highlights, Fall 2014; Fall 2015; Summer 2021; Fall 2022, as cited in DOJ Guidance.)
What good faith does not mean: deliberately avoiding repayment, hiding income, or making financial decisions that suggest intentional evasion of the debt.
What good faith does mean: making reasonable efforts given your circumstances — attempting to contact your servicer, exploring options, applying for deferment or forbearance, or simply being unable to pay because you had nothing to pay with.
SPECIFIC SITUATIONS: WHERE DO YOU STAND?
I never graduated.
Failing to obtain the degree for which the loan was taken out is an enumerated presumption factor under prong two of the 2022 DOJ guidance — it directly supports a finding that your inability to repay is likely to persist. Borrowers who took on debt without completing a degree often face reduced earning capacity relative to their loan balance, which also supports prong one. (DOJ Guidance, p. 8.)
I am disabled.
A permanent disability or chronic health condition is one of the strongest factual bases for discharge, and it is an enumerated presumption factor under prong two. The guidance specifically identifies disability that limits earning capacity as grounds to presume the borrower’s hardship will persist. You do not need to be receiving formal disability benefits, though documentation helps. Medical records establishing a condition that limits your ability to earn income are what matter. (DOJ Guidance, p. 7.)
I am retired or close to retirement.
Age is a significant factor. Borrowers 65 or older are entitled to a presumption in their favor under the 2022 guidance on prong two. For borrowers in their late 50s or early 60s with limited retirement savings and a long remaining repayment period, the persistence analysis also supports discharge — your income trajectory is unlikely to improve enough to service the debt. (DOJ Guidance, p. 7.)
I never made any payments.
Past non-payment alone does not defeat the good faith prong. The 2022 DOJ guidance explicitly states: “A debtor will not be disqualified based on past non-payment if other evidence of good faith exists.” What matters is whether you made reasonable efforts — sought information, contacted your servicer, attempted to explore repayment options — not whether those efforts resulted in actual payments. (DOJ Guidance Fact Sheet, November 17, 2022; DOJ Guidance, pp. 10-11.)
My income is low but not zero.
You do not need to be destitute. The standard is whether you can maintain a minimal standard of living while repaying — not whether you have any income at all. Borrowers with part-time income, gig income, or income from public assistance have successfully discharged student loans where the income-to-expense analysis did not support repayment.
IF YOUR COURT USES THE TOTALITY OF CIRCUMSTANCES TEST
A minority of circuits — primarily the Eighth Circuit under In re Long, 322 F.3d 549 (8th Cir. 2003) — apply the totality of circumstances test instead of Brunner. Under this approach, the court considers all relevant facts holistically: past, present, and future financial resources, reasonable living expenses, and any other circumstances bearing on the borrower’s ability to repay. There are no fixed prongs to satisfy independently.
The totality test is generally considered more flexible than Brunner. If you are unsure which test applies in your district, that is a threshold question worth identifying before you file anything.
PARTIAL DISCHARGE
If you do not clearly qualify for full discharge, partial discharge is available and underused. Under the 2022 DOJ guidance, government attorneys are directed to consider recommending partial discharge where full discharge is not supported but some portion of the debt creates undue hardship. A court can discharge part of the balance, reduce the principal, or modify the terms. (DOJ Guidance, p. 13.) Borrowers and their attorneys frequently fail to pursue this option.
THE HONEST ASSESSMENT
The best candidates for student loan discharge in bankruptcy are borrowers who are older, disabled, never completed the degree, have been in repayment for a decade or more, have income that cannot support loan payments under any realistic repayment scenario, and have some history of attempting to engage with their loans — even if those attempts were unsuccessful. The 2022 guidance has meaningfully expanded that pool.
If you have significant earning capacity, are early in your career, and your financial difficulties are temporary, discharge is harder — not impossible, but harder. The analysis is fact-specific, and honest self-assessment matters before you commit to filing an adversary proceeding.
FREQUENTLY ASKED QUESTIONS
What if I have both federal and private student loans?
They are treated separately. The 2022 DOJ guidance applies only to federal loans held by the Department of Education. Private loans go through the same adversary proceeding process but without the benefit of DOJ guidance — private lenders make their own decisions about whether to oppose your discharge request.
Does it matter which state I live in?
Yes, in one important respect: the test your court applies depends on which federal circuit you are in. Most circuits use Brunner. The Eighth Circuit uses the totality of circumstances test. Your state of residence at the time you file determines which district — and which circuit — governs your case.
What if my income just went up — does that kill my case?
Not necessarily. A recent income increase is relevant evidence, but the court looks at your full financial picture — including your total debt load, your expenses, and the sustainability of the income increase over the repayment period. A temporary improvement does not automatically defeat prong two if the underlying circumstances supporting persistence are still present.
Can I discharge student loans if I am already in default?
Yes. Default status does not disqualify you and in some cases strengthens your position by demonstrating that repayment has already broken down. Collections having resumed as of 2025 makes pursuing discharge more urgent for borrowers in default, not less.
What if I already tried to discharge my loans and failed?
A prior unsuccessful adversary proceeding is not an automatic bar to filing again, particularly if your circumstances have materially changed since the prior proceeding or if the 2022 DOJ guidance was not yet in effect when you filed. This is a fact-specific question worth discussing with a bankruptcy attorney.
Does filing bankruptcy affect my cosigner?
Your discharge applies only to your personal liability. If someone cosigned your loans, the lender can still pursue the cosigner for the full balance unless the cosigner separately seeks their own discharge or the loan agreement contains a co-debtor stay provision applicable under Chapter 13.
SOURCES
11 U.S.C. § 523(a)(8)
Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987)
In re Long, 322 F.3d 549 (8th Cir. 2003)
Hull v. United States Dep’t of Educ., Bankr. E.D. Ky. 2019
U.S. Department of Justice, Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation (November 17, 2022)
U.S. Department of Justice, Student Loan Discharge Guidance — Fact Sheet (November 17, 2022)
CFPB Supervisory Highlights, Fall 2014; Fall 2015; Summer 2021; Fall 2022
IRS Collection Financial Standards (National and Local Standards)