Student loans

What can you try for federal student loans before bankruptcy?

Federal student loans have their own relief options: income-driven repayment, deferment or forbearance, consolidation, rehabilitation of a defaulted loan, and discharges tied to a closed school, school misconduct or disability. Applying is free. Several of these steps also count as evidence of good faith if you later ask a bankruptcy court to discharge the loan, and not having enrolled in an income-driven plan does not automatically disqualify you.1 2 3 4

Start your student loan discharge journey

By Bankruptcy Route Editorial Team

Updated October 22, 20265 min read

Federal student loans come with options that do not involve a court. Here is what each one does, what it costs, and how using them affects a later bankruptcy case.

General information, not legal advice. Rules and amounts change; check with a lawyer or the court before you act.

In this guide

Which options lower or pause your payment?

These options keep the loan in place and change what you pay each month. The details below are as Federal Student Aid described them when we checked on October 13, 2026.5

Options that change the monthly payment on a federal student loan
Option	What it does	What to know
Income-driven repayment5 6	Bases the monthly payment on income and family size; for some borrowers it can be as low as $0	Income and family size must be recertified every year. Defaulted loans are not eligible
Deferment or forbearance7	Temporarily suspends payments	In most cases interest keeps building, and the time may not count toward loan forgiveness
Consolidation8	Combines federal loans into one new federal loan, with no application fee	It cannot be reversed, and Federal Student Aid lists more interest and the loss of certain benefits as disadvantages

The plans changed in 2025 and 2026. A new Repayment Assistance Plan now sits beside the older income-driven plans, and a court order stopped the SAVE plan in March 2026. Our income-driven repayment guide has the current list.9 10

What if the loan is already in default?

Default changes the menu. A defaulted loan loses deferment, forbearance and the choice of repayment plan, and it is not eligible for income-driven repayment until it is out of default.6 5

Federal Student Aid describes loan rehabilitation and loan consolidation as the main ways out. Rehabilitation takes nine agreed monthly payments. Consolidation is quicker to apply for, but the record of the default stays on your credit history.11

Which federal discharges do not need a court?

Some programs cancel a federal loan outright. Each has its own rules and its own application.

Closed school discharge: for borrowers who could not finish because the school closed while they were enrolled, on an approved leave of absence, or within 180 days after they withdrew.12
Borrower defense to repayment: for Direct Loan borrowers whose school engaged in certain misconduct related to the loan or the education it provided.13
False certification discharge: for cases where the school signed the borrower up for loans without authorization or enrolled a student who did not meet eligibility requirements.13
Total and permanent disability discharge: for qualifying borrowers with certain severe disabilities.3
Public Service Loan Forgiveness: forgives the remaining balance on Direct Loans after the equivalent of 120 qualifying monthly payments (10 years) under an income-driven plan while working full-time for an eligible employer.14

Do you have to pay anyone to apply?

No. The FTC says applying for federal repayment and forgiveness programs is free, and that there is nothing a student loan debt relief company can do that you cannot do yourself for free.1 2

Federal Student Aid says the Department of Education and its loan servicers help at no cost with lowering a payment, changing plans, consolidating, postponing payments, checking eligibility for forgiveness and getting out of default. A company that wants a fee up front is a warning sign.15 11

Do these options cover private student loans?

No. These are federal programs for federal loans. The FTC says borrowers with private student loans typically have fewer options, especially for forgiveness or cancellation, and should contact their loan servicer directly.2 1 11

How do these options affect a later bankruptcy case?

Student loans are generally not discharged in bankruptcy unless repaying them would impose an undue hardship, and the borrower has to prove that in a separate lawsuit inside the bankruptcy case.16 4

In federal student loan cases, Justice Department attorneys look at whether the borrower made good faith efforts to repay. Their guidance lists seven steps that are evidence of good faith, and most of them are things described in this guide: making a payment, applying for a deferment or forbearance, applying for an income-driven plan, applying for consolidation, and talking with the servicer about options. Taking at least one of the listed steps demonstrates good faith unless there are countervailing circumstances.3

The guidance also says the availability of an administrative discharge, such as a disability or closed school discharge, should have limited influence on the bankruptcy analysis. And not enrolling in an income-driven plan does not by itself show a lack of good faith.3

The FTC describes bankruptcy as generally a last option because of its long-term effect on credit. Whether it is the right step after these options depends on your facts, which is a question for a bankruptcy lawyer.2

Common questions

Do I have to try these options before filing bankruptcy?

Under the Justice Department's process, past non-payment or not enrolling in an income-driven repayment plan does not automatically disqualify a borrower. Having tried one of these options does count as evidence of good faith.4 3

Does it cost anything to apply for a federal repayment plan or discharge?

No. The FTC says applying for federal repayment and forgiveness programs is free.1 2

If I might qualify for a closed school or disability discharge, can I still ask for a bankruptcy discharge?

The Justice Department guidance says the availability of that kind of administrative relief should have limited influence on the bankruptcy analysis. The bankruptcy judge makes the final decision.3

Are these options available for private student loans?

No. They are federal programs. The FTC says private loan borrowers typically have fewer options and should contact their loan servicer directly.2 1 11

Sources

Official courts & government references

Choose your next step

See what asking a bankruptcy court to discharge a federal student loan involves.