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.
Timeline of Key Changes
The landscape for student loan discharge in bankruptcy has shifted significantly over the past several years. Here is a timeline of the most important developments.
| Date | Event | Impact |
|---|---|---|
| 2005 | BAPCPA extends 523(a)(8) to private loans | Private student loans now require undue hardship showing |
| 2020 | Homaidan v. Sallie Mae (2d Cir.) | Clarifies that some private loans are not protected by 523(a)(8) |
| Nov 2022 | DOJ/DOE joint guidance issued | Replaces blanket opposition with merits-based review |
| 2023 | SAVE plan replaces REPAYE | Lower IDR payments, shorter forgiveness for small balances |
| 2023-2024 | FRESH START Act reintroduced | Would eliminate hardship requirement for loans 10+ years old (not yet enacted) |
| 2024-2025 | Courts continue softening Brunner application | More partial and full discharges granted nationwide |
| Dec 2025 | ARP IDR tax exclusion set to expire | IDR forgiveness may become taxable; bankruptcy remains tax-free |
What This Means for Borrowers in 2026
If you are considering student loan discharge in 2026, you are in a better position than borrowers at any point in the previous three decades. The combination of the DOJ guidance, evolving case law, and growing judicial criticism of rigid Brunner applications has created a window of opportunity.
However, the landscape remains uncertain. The DOJ guidance is a policy directive, not a statute - it could be changed by a future administration. The FRESH START Act has bipartisan support but has not been enacted. And the SAVE plan faces ongoing legal challenges that could affect its availability.
The most important takeaway: do not assume your student loans cannot be discharged. If you are struggling with student loan debt and are considering bankruptcy, consult with an attorney experienced in student loan adversary proceedings. The odds of success are better than they have been in decades.
For federal loan borrowers: Complete the DOJ attestation form as part of your adversary proceeding. If the DOJ recommends discharge, courts typically grant it. This single step has transformed the success rate for qualifying borrowers.
Last updated: March 2026. Not legal advice.
Part of the Open Bankruptcy Project