2022 DOJ Guidance -- The Biggest Change
In November 2022, the Department of Justice and the Department of Education jointly issued new guidance fundamentally changing how the federal government evaluates student loan discharge requests in bankruptcy. Before this guidance, the DOJ reflexively opposed nearly every student loan discharge petition, forcing borrowers into expensive and often unsuccessful litigation. The new framework replaces that blanket opposition with a merits-based review process.
- New attestation form: Borrowers complete a standardized form that the DOJ uses to evaluate their financial situation against the Brunner test or applicable circuit standard
- Merits-based review: The DOJ now evaluates each case on the facts rather than opposing every petition as a matter of policy
- Government may support discharge: When the evidence warrants it, the DOJ recommends full or partial discharge to the bankruptcy court
- Partial discharge: In cases where full discharge is not appropriate, the DOJ may recommend reducing the loan balance, lowering the interest rate, or discharging a portion of the debt
Impact: The DOJ recommended discharge in a significant majority of evaluated cases during the first year of the new guidance. When the federal government supports your discharge petition, courts are far more likely to grant relief. This single policy change has made student loan discharge more achievable than at any point since the Brunner test was adopted.
FRESH START Act
The FRESH START Through Bankruptcy Act is proposed bipartisan legislation that would eliminate the undue hardship requirement for student loans that are more than 10 years old. Under this bill, borrowers who have carried student loan debt for at least a decade would be able to discharge those loans in bankruptcy using the same standard applied to credit cards, medical bills, and other unsecured debts.
The Act has been introduced with bipartisan support in both the Senate and the House. Co-sponsors include members from both parties, reflecting growing recognition that the current student loan exception in bankruptcy law has become unworkable. As of March 2026, the bill has not been enacted into law, but it continues to receive attention and has been reintroduced in successive congressional sessions.
Even without the FRESH START Act, the combination of the 2022 DOJ guidance and evolving case law has substantially improved the landscape for borrowers seeking discharge. If the Act does pass, it would make the process dramatically simpler for anyone with loans older than 10 years.
Evolving Case Law
Beyond the DOJ guidance and proposed legislation, federal courts themselves are shifting how they apply the Brunner test and undue hardship standard. Several significant developments have emerged in recent years:
- Courts rejecting rigid Brunner interpretations: Multiple courts have moved away from the "certainty of hopelessness" standard, instead applying a "more likely than not" analysis of whether the borrower can repay
- Higher settlement rates: With the DOJ now supporting discharge in qualifying cases, lenders and servicers are settling more adversary proceedings rather than litigating through trial
- Homaidan decision: The Second Circuit's ruling in Homaidan v. Sallie Mae opened a new path for discharging private student loans by clarifying that not all private education loans qualify for the section 523(a)(8) exception
- Growing judicial and academic criticism: Federal judges and bankruptcy scholars have publicly called for reform of the undue hardship standard, adding pressure on Congress to act
- Totality of circumstances test gaining ground: The Eighth Circuit's totality of circumstances approach, which is more flexible than Brunner, has been adopted or cited favorably by courts outside its original jurisdiction
These changes collectively mean that borrowers filing adversary proceedings today face a significantly more favorable environment than borrowers who filed even five years ago. The barriers are still real, but they are lower than they have been in decades.
Last updated: March 2026. Not legal advice.
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