Understanding Undue Hardship: When Student Loans Might Be Discharged

Student loans are often described as “non-dischargeable.” That phrase gets repeated so often that many people assume bankruptcy can’t help them with student loan debt.

This isn’t entirely true.

There is a legal pathway to discharging student loan debt in bankruptcy. It’s narrow. It’s demanding. But it exists, and it centers on one concept: undue hardship.

If you’re carrying student loan debt that has outpaced your income, your health, or your ability to live a stable life, you have options. Here’s what you need to know.

What Does “Undue Hardship” Mean in Student Loan Cases?

In bankruptcy, student loans are treated differently from most other debts. To discharge them, you must prove that repaying the loans would impose an undue hardship on you and your dependents.

Courts do not use a casual definition of hardship. They apply a structured legal test that looks at your financial reality. It considers your financial situation today and going forward.

Most courts rely on what’s known as the Brunner test, which examines three core factors.

Three-Part Undue Hardship Test

To qualify for a student loan discharge, you generally must show:

You cannot maintain a minimal standard of living if forced to repay.

This does not require extreme poverty. It looks at whether your income covers basic needs like housing, food, utilities, medical care, and transportation. If repayment forces you below that baseline, this factor may be met.

Your financial situation is unlikely to improve.

Courts examine whether your hardship is temporary or ongoing. Chronic illness, disability, limited earning capacity, age, or long-term caregiving responsibilities all matter. The question is whether this financial strain is likely to persist for a significant portion of the repayment period.

You made good-faith efforts to repay.

This is where many people get nervous. Good faith does not require perfect payment history. It looks at whether you tried. Applying for income-driven repayment plans, communicating with servicers, making payments when possible, or attempting deferments can all support this element.

The courts use a combination of all of these factors to make a decision.

Why More Borrowers Are Pursuing Undue Hardship Now

For years, student loan discharges were rare. That has started to change.

Courts and federal agencies have acknowledged that long-term financial distress tied to student loans is real. Borrowers who have been stuck in repayment plans for decades, whose balances grow despite payments, or whose health or income has declined are increasingly being heard.

This doesn’t mean discharge is automatic. But it does mean the door is more open than most people think.

Common Myths That Stop People From Using Bankruptcy To Help With Student Loans

Some of the most common myths that prevent people from considering bankruptcy include:

“I have income, so I don’t qualify.”

Not true. Many successful undue hardship cases involve employed borrowers whose income still cannot support repayment.

“I didn’t make enough payments.”

Payment history matters, but it’s not the only measure of good faith.

“It’s impossible.”

Difficult? Yes. Impossible? No.

How the Process Actually Works

Student loan discharge is not automatic in bankruptcy. You must file a separate legal action, called an adversary proceeding, and present evidence supporting undue hardship.

That evidence often includes:

• Detailed income and expense records
• Medical documentation, if relevant
• Employment history and prospects
• Loan history and repayment attempts

This is a legal process, not a form you casually submit online. Preparation matters.

Bottom Line

Undue hardship is not a loophole. It’s a legal standard designed for people whose student loans have become a permanent barrier to financial stability.

If your loans feel endless and have followed you through illness, career changes, or decades of repayment, it may be time to stop assuming you’re out of options.

To learn more about student loans and how bankruptcy could help you overcome financial challenges, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or (912) 324-3176 (Jesup, GA) to schedule a consultation.