Yes, student loans can be discharged in bankruptcy in 2026, but the process is not automatic. For most federal student loans and many qualified private education loans, the borrower must show that keeping the debt would create an “undue hardship” under 11 U.S.C. § 523(a)(8). That usually requires a separate lawsuit inside the bankruptcy case, called an adversary proceeding.
The key 2026 development is not a brand-new law. The Department of Justice and Department of Education created a standardized federal process in 2022, and it remains current in 2026. The DOJ’s student-loan guidance page was updated in March 2026 and includes an updated attestation form. For Department of Education-held loans, the process is intended to make it easier to present the relevant financial facts and, when those facts support relief, for the government to recommend a full or partial discharge.
Student Loan Bankruptcy in 2026: What Has Changed?
The Bankruptcy Code still uses the same core undue hardship standard. What has changed is how the federal government evaluates many discharge requests involving loans held by the Department of Education.
A borrower normally completes an attestation describing income, necessary expenses, assets, repayment history, employment circumstances and why the inability to repay is likely to continue. Government attorneys review that information and decide whether to stipulate to facts supporting undue hardship and recommend discharge. The bankruptcy judge, not the DOJ or loan servicer, makes the final decision.
The newer process can reduce uncertainty and unnecessary litigation, but it does not guarantee relief. It also does not apply in exactly the same way to every private student loan or education-related debt.
How the Undue Hardship Test Works
Federal law does not define “undue hardship” in detail, so courts have developed tests for applying it. The exact framework depends on the federal circuit where the bankruptcy case is filed.
The Brunner Test
Many courts use the Brunner test. In general, a borrower must show that current income and expenses do not permit a minimal standard of living while repaying the loans, that the financial difficulty is likely to persist for a significant part of the repayment period, and that the borrower has made good-faith efforts to deal with the debt.
Good faith does not require a flawless payment record. Federal guidance tells government attorneys to consider efforts such as trying to earn income, controlling expenses, making payments when possible, seeking deferment or forbearance, and contacting the Department of Education or a servicer about repayment options. A reasonable explanation for not using an income-driven repayment plan does not automatically defeat a claim.
The Totality-of-the-Circumstances Approach
The Eighth Circuit uses a totality-of-the-circumstances test rather than Brunner. It considers past, present and reasonably reliable future financial resources, necessary living expenses and other relevant facts. The DOJ guidance was designed to work in both Brunner and totality jurisdictions.
When Future Inability to Repay May Be Easier to Show
The federal guidance identifies circumstances that can support a presumption that financial hardship will continue. Examples include being age 65 or older, having a disability or chronic injury that affects earning capacity, being unemployed for at least five of the previous ten years, not completing the degree for which the loans were taken, or having loans in repayment status for at least ten years. These presumptions are rebuttable, so the full financial picture still matters.
Useful supporting records can include recent pay information, tax returns, benefit statements, housing costs, insurance expenses, dependent-care costs, loan histories and servicer correspondence. A detailed monthly budget is usually more persuasive than a general statement that money is tight.
What the Bankruptcy Process Usually Looks Like
First, the borrower files a bankruptcy case, commonly under Chapter 7 or Chapter 13. Student loan discharge is then pursued through an adversary proceeding seeking a ruling that repayment would impose undue hardship. The proper loan holder or government defendant must be served.
For Department of Education-held federal loans, the DOJ process generally uses the attestation and federal loan records. The government reviews present ability to pay, likely future ability to pay and good-faith repayment efforts. If the facts support relief, it may recommend full discharge or, in appropriate cases, partial discharge. The court retains the final authority.
Related topics worth reviewing as part of a broader debt strategy include Chapter 7 vs Chapter 13 bankruptcy, the bankruptcy means test and federal student loan repayment options.
A Practical Example
Consider a borrower with $85,000 in Department of Education-held loans who earns enough to cover rent, food, transportation, insurance and care for a dependent, but has almost nothing left each month. The loans have been in repayment for more than ten years, and the borrower has repeatedly contacted the servicer and made payments when income allowed.
That borrower does not automatically qualify. Still, the long repayment history may support the federal guidance’s future-inability presumption, the budget may support present inability to pay, and the documented servicer history may support good faith. Presenting those facts with records is stronger than simply arguing that the loan balance is large.
Federal and Private Student Loans Are Not Identical
The standardized DOJ and Education Department process is aimed at federal loans held by the Department of Education. Private student loan cases require closer attention to the lender, loan type and whether the debt falls within § 523(a)(8). Some private education debts may fall outside the statutory categories that receive special bankruptcy protection, so not every debt labeled “student loan” is treated identically.
FAQ
Are student loans automatically discharged in Chapter 7?
No. Qualifying student loans generally survive Chapter 7 unless the borrower obtains a determination that repayment would cause undue hardship, usually through an adversary proceeding.
Does the 2026 process eliminate the Brunner test?
No. There is no new 2026 statute eliminating Brunner. The standardized federal process was introduced in 2022 and remains current in 2026, while courts still apply the undue-hardship standard required by law.
Can only part of a student loan be discharged?
Potentially. DOJ guidance allows government attorneys to consider supporting a partial discharge when the facts justify some relief but not elimination of the entire balance. The court makes the final decision.
Do I need a lawyer?
Self-representation is possible, but these cases involve federal statutes, court rules, service requirements and jurisdiction-specific case law. Legal advice can be useful when identifying the correct defendant, determining which loans are covered and organizing evidence of undue hardship.
What to Take Away
Student loan discharge in bankruptcy remains harder than discharging ordinary unsecured debt, but the belief that student loans can never be discharged is wrong. In 2026, borrowers with Department of Education-held loans have a more structured path for presenting an undue-hardship case. The strongest cases are built around documented income, reasonable expenses, credible evidence that financial difficulty will persist and a record of good-faith efforts to address the debt.