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Why Discharge of Student Loan Debt in Bankruptcy is Difficult but Not Impossible

Donna Baxter
21st Century Wire

The issue of student loans is significant for all the students who are struggling hard to advance their degrees without financial help from their parents or on their own, due to which they take up student loans and grants. Even then, not every brilliant student is lucky enough to grab the opportunity of scholarship since the total number of scholarship money is limited as per the resources granted to the university’s or college’s funds. Student loans are the only way out for such students to get into the schools of their choices.

 Only a few areas of the total population in the U.S have been fared well by the economic restraints developed as a result of the Great Depression. However, the ones that are hardly hit by stagnant wages and slow job growth is education. High school graduates face the challenges of rising tuition costs and to pay them back they need to secure loans from banks and likely institutions. Moreover, even hard hitting is the fact that it is not an easy task to find employment good enough to help them pay back their colossal tuition fees and other bills.

Bankruptcy Rules and How They Apply

Student loan debt is not dischargeable in bankruptcy whether the debt is private or public, making debt relief even harder for students. Mainly people intend to declare bankruptcy to show their inability to pay back the money due to undue hardship. Usually, courts make use of three part Brunner’s test to assess whether the debtor is able to demonstrate his/her undue hardship to help themselves with student debt. If the students can give satisfactory answers to the three requirements, their student loans could be dischargeable.

 1. The student is unable to maintain a minimal living standard for him/herself and the dependents, if coerced into paying back the loan based on present income and expense schedule.

 2. Other situations exist that clearly indicate the current financial circumstances are likely to stay back until a significant period of the repayment time period of the entire loan.

 3. The student has made efforts to be able to pay back the loan.

 The courts usually interpret the results of the Brunner’s test strictly and significantly. However, whether or not a student qualifies for the hardship discharge will certainly depend upon the combination of individual circumstances and facts. Usually, it is quite difficult but not impossible to get rid of the student loan in bankruptcy without hassles. The bankruptcy cases for student loan are dealt with under different laws in different counties and states in the country. The laws prevalent in one state or county might not be applicable in other counties and states. Similarly, the statistics relating to the success and failures will also be different.

 At present, the Federal bankruptcy laws allow cutting of student loan debt by way of completing the bankruptcy procedure in case the debtor can demonstrate that repayment of the loan will certainly cause him/her hardships. This means that there should be hopelessness with the debtor’s financial status to get through the debt.

 Until 1976, college and post-graduate students could get their college debts discharged by declaring and proving bankruptcy. During the time, a change in law barred students with heavy student debts from public school from discharging them just the way auto loans debts and credit cards are today. Moreover, Congress made the procedure even more difficult by burdening another bankruptcy law amendment during the 1990’s and during 2005; the student loans secured by students from private schools could no longer be discharged.

Bank Attorney

If you are devastated by student loan and are thinking about filing for bankruptcy, you should contact a reputable and experienced bankruptcy attorney. A professionally sound bankruptcy lawyer will evaluate your case and suggest you the best of the available options. Research over the internet for top bankruptcy firms or private lawyer professionals in your area or ask for reference form your trusted network of people. In order to get the information you need on debt relief, you can visit consolidatedcredit.org before signing up with a debt management service.


Student loans are not impossible to get discharged but a little irksome since you need to prove bankruptcy on certain areas and ensure the court undue hardship. Debt relief is not impossible; however, you need to take into consideration the law prevalent in your state/ county.

Author Donna Baxter is an expert on financial matters including debt relief and bankruptcy. She has written scores of articles and columns on these issues as well as investment guidelines for young investors and savers. In order to get the information you need on debt relief, you can visit consolidatedcredit.org before signing up with a debt management service.



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