For decades, student loans have been viewed as effectively immune from bankruptcy; a perception that shaped borrower behavior, legal advice, and even mainstream media coverage. A recent academic analysis published the The American Bankruptcy Law Journal suggests that narrative is no longer aligned with reality.
According to new research by Jason Iuliano, a law professor at the University of Utah, borrowers who actually seek to discharge student loans in bankruptcy are now succeeding at strikingly high rates. The study found that student loan debtors who pursued discharge through bankruptcy achieved relief in 87% of completed cases filed between late 2022 and late 2023, a dramatic increase from a 61% success rate in 2017 and more than double the rate seen nearly two decades ago.
The shift is largely attributed to a Biden-era policy change adopted jointly by the Departments of Justice and Education in late 2022. The guidance introduced clearer standards for evaluating “undue hardship” and replaced a costly, adversarial process with a streamlined attestation form. That form allows borrowers to present their financial circumstances in a structured way, enabling government attorneys to recommend discharge when criteria are met rather than reflexively litigating every case.
Importantly for creditors, servicers, and collection professionals, the research underscores that student loan discharge remains far from automatic. Borrowers must still file an adversary proceeding and demonstrate financial distress under defined criteria. In fact, the study highlights a persistent “bankruptcy gap”: an estimated 99% of student loan borrowers who file for bankruptcy still never attempt to discharge their loans at all.
Even so, filings are trending upward. Public-records data cited in the analysis show adversary proceedings rose 12% this year and nearly doubled compared to 2023, suggesting that attorneys and borrowers may be slowly recalibrating their assumptions.
The findings arrive amid renewed pressure on the student loan system. Pandemic-era protections have ended, wage garnishments are restarting, and popular income-driven repayment options face legal and legislative headwinds. For financially distressed borrowers, many of whom also carry other unpaid obligations, bankruptcy is increasingly being viewed as a legitimate safety valve rather than a lost cause.
For organizations collecting or managing consumer debt, the takeaway is not that student loans are suddenly easy to discharge, but that long-held assumptions may need updating. As courts, regulators, and borrowers adapt to this evolving landscape, student loan distress will continue to shape broader consumer financial behavior and the collections environment surrounding it.
