A New Era for Discharging Student Loans in Bankruptcy

For decades, bankruptcy attorneys have repeated the same line to struggling borrowers: “Student loans are almost impossible to discharge.” That statement is no longer true. In fact, recent data shows a dramatic uptick in successful student‑loan discharges — a shift driven by coordinated federal reforms and a streamlined review process.

A recent study highlighted in national reporting found that the success rate for borrowers seeking to discharge student loans in bankruptcy has jumped to 87%. That number is astonishing when compared to the historical landscape, where only a tiny fraction of borrowers even attempted an adversary proceeding, and even fewer succeeded.

What changed?
In late 2022, the Department of Justice and Department of Education jointly introduced new guidance designed to make the process more consistent, transparent, and fair. The agencies recently announced that the streamlined procedure is helping increasing numbers of eligible borrowers obtain relief. Courts now receive standardized attestations, clearer hardship criteria, and a more predictable framework for evaluating undue hardship.

A separate analysis published in the American Bankruptcy Law Journal confirms the trend: borrowers are achieving discharges more often than previously believed, and the new system is functioning well for those who use it. The problem, according to the study, is that most eligible borrowers still don’t know this relief exists.

For millions of Americans facing resumed student‑loan payments and aggressive collection efforts, bankruptcy is becoming a more realistic path to a fresh start. While the process still requires careful legal navigation, the old assumption — that student loans are categorically nondischargeable — is rapidly becoming outdated.

The bottom line:
If a borrower is experiencing long‑term financial hardship, it is now more important than ever to evaluate whether a bankruptcy filing could provide meaningful relief, including the possibility of discharging student debt.

As always, nothing in this article shall be construed as legal advice. Neither the words contained herein or their thoughts and perspectives shall form an attorney-client relationship. Bankruptcy cases are complex and if you need legal advice in this area please seek legal counsel forthwith. James Olsen Law gives no legal or business/investing advice by virtue of these articles