Federal student loan discharge
Federal student loans can be discharged in bankruptcy
If you have been told that student loans can never be discharged, you are not alone. Servicers say it. Financial advisors say it. Even many bankruptcy attorneys say it, because for a long time it was very nearly true and they have not looked at the question again.
It was never actually the rule. Student loans have always been dischargeable on a showing of undue hardship. What was true is that courts applied the standard so strictly, and the process was so expensive, that almost no one tried. Over time that became a myth that everyone believed.
That has changed, and the change is now several years old. For many of the people I meet, it is the first time in years they have opened a loan statement and felt something other than dread.
The Colorado record
$2M+
in federal student loan debt discharged for my clients
More federal student loan discharge cases filed in Colorado than every other attorney in the state combined.
Ask whether you qualifyThe law
What actually governs this
- The undue hardship standard
- Discharging a student loan requires showing undue hardship, which most courts assess under a three-part test from a 1987 case called Brunner: a present inability to maintain a minimal standard of living while repaying, circumstances showing that will continue, and a good-faith effort to repay. The test itself did not change. What changed is how it is applied.
- The 2022 guidance
- In November 2022 the Department of Justice, working with the Department of Education, issued guidance for how government lawyers handle these cases. It gives borrowers an attestation form and gives the government a consistent way to evaluate it, instead of opposing every case. Where the criteria are met, government counsel can recommend that the discharge be supported. That was the real shift: these cases stopped being a long, expensive battle against an opponent with unlimited resources.
- What that means for a real case
- The framework looks at your expenses compared with standard allowances, at factors suggesting your situation will not significantly improve, and at your history with the loans. Long periods in repayment, enrollment in income driven plans, age, disability, and a degree that never led to the income it promised all count in your favor.
Candidates
Whether this is you
Generally, the person who can use bankruptcy to discharge their student loans has been in repayment for a decade or more, often on an income-driven plan, watching the balance grow while making every payment asked of them. They are often employed and stable. They aren't destitute, and for years they've assumed that they will never get relief.
Teachers. Social workers. Healthcare workers. People with graduate degrees in fields that never paid what the loans assumed. People who finished a degree in stages over years of forbearance while interest grew. People who never finished at all and are carrying the debt anyway. People over 65 still paying on their own, or their children's and grandchildren's loans. I have met so many of you, and I understand how heavy this has been.
The honest answer is that whether you qualify depends on details I cannot assess from a web page. What I can tell you is that there are far more people who qualify and assume they can't than those who are not eligible, and finding out is neither expensive nor drawn out. It starts with your loan records and a conversation.
You do not have to be destitute to qualify. Many of my clients are working, stable, and still unable to pay these loans.
The process
What the process looks like
The loan data
Everything starts with your federal loan record, which you can download yourself. I read your actual repayment history, not a summary: which loans, when they were disbursed, what status they were in and when, and how long each has truly been in repayment. That history is what the case depends on, and it is often different from what borrowers believed.
The evaluation
I will tell you honestly whether I think your case is strong, borderline, or not there yet. If it is not there, I will say so now rather than after you have spent money. Some people I have to turn away at this step, and some I ask to come back when a particular circumstance changes. Either way, you will know where you stand.
The bankruptcy case
The discharge happens inside a bankruptcy case, so there is a Chapter 7 or a Chapter 13 underneath it. For many clients the other debts matter in their own right. For some, the bankruptcy is mainly the vehicle for the student loan case.
The adversary proceeding
The discharge itself requires a separate lawsuit filed inside the bankruptcy, called an adversary proceeding, against the loan holder. Many firms do not handle this part. It is a large part of my practice. We will file your Complaint, prepare your Attestation, and work with the US Attorney's office to move your case to resolution.
The outcome
Resolution can be a full discharge, a partial discharge, or a negotiated outcome that turns what remains into something you can truly afford. I will not promise a result at the start, because no honest attorney can. I will tell you what I believe is achievable before you commit.
Why it matters who files it
Experience that helps your case
I have filed more federal student loan discharge cases in Colorado than every other attorney in the state combined, and my clients have discharged more than two million dollars of federal student loan debt.
I share that because, for this decision, experience matters. This work is detailed and procedural, and there is a real learning curve. You deserve someone who has done it many times and recently, in this district, with these judges, and opposite this U.S. Attorney's Office. Every one of those cases was a person who had carried that debt for years, and helping them is one of the most meaningful parts of my work.
Read more
The long answers
Can federal student loans be discharged in bankruptcy?
Yes, on a showing of undue hardship. How § 523(a)(8), the Brunner test, the Tenth Circuit and the 2022 DOJ attestation process work for Colorado borrowers.
11 minute read
The student loan attestation, explained: what the government's form asks and how it is evaluated
What each section of the DOJ student loan attestation asks, how IRS expense standards and the presumptions work, and what happens after you submit it.
10 minute read
In clients’ words
“When I first reached out to Tara Salinas, I was overwhelmed and unsure of what to do about my student loans. From our very first conversation, she made me feel heard, understood, and genuinely cared for.”
Find out where you stand
If you have been paying on a federal loan balance that keeps growing, and you have been told for years that bankruptcy is not an option for dealing with student loans, please know that the person who told you that was probably relying on an outdated understanding of the law. Whether it can help in your case is a question I can usually answer for you after analyzing your data.