What counts as a good faith effort to repay student loans?

Where does good faith fit in a discharge case?

Under the Justice Department's November 2022 guidance, government attorneys are told to agree to the facts showing undue hardship and recommend discharge when three conditions are met: you cannot repay now, that is likely to continue, and you acted in good faith in past efforts to repay. This guide is about the last of those.1

Good faith is about what you did, not what it achieved.

Which steps count as good faith?

The guidance lists seven. They are alternatives, and more than one can apply to you.1

Taking at least one of these steps demonstrates good faith unless there are countervailing circumstances.1

What if you paid little, nothing, or ignored the loans for years?

The guidance speaks to this directly. Where other evidence of good faith exists, a failure to repay, or inconsistent or limited repayment, does not show a lack of good faith.1

Attorneys are told to look at the entire life of the loan, not only its recent history. Inactivity during the automatic COVID forbearance between March 2020 and December 2022 is not evidence of bad faith.1

Thin records are not fatal either. If the Department of Education has no records or incomplete records about you, that should not reduce the weight of your own evidence.1

The guidance also says student loan servicing has at times been plagued by errors and inaccurate information, so the review should not disqualify borrowers who did not engage with repayment because of misinformation, wrongful decisions or a lack of adequate guidance. If that describes a gap in your history, say what you were told and when.1

What if you never enrolled in an income-driven plan?

Taking part in an income-driven repayment plan is evidence of good faith. Not enrolling in one does not by itself show a lack of good faith, and government attorneys are expected to accept any reasonable explanation. The guidance gives examples.1

• You were denied access to a plan, or steered into forbearance or deferment instead.1
• You were given inaccurate or incomplete information about the plans.1
• You plausibly believed a plan would not have meaningfully improved your situation.1
• You did not know the option existed, after reasonable engagement with your loans.1

What else does the government look at?

Good faith also takes into account your efforts to find work, maximize income and minimize expenses. Expenses that fall within the IRS Standards count as minimized, and personal or family obligations that limit work or raise expenses can be consistent with good faith.1

Some conduct works against you. The guidance says a loan should not be discharged where the debtor deliberately created the hardship, abused the student loan system, for example by fraud in getting the loans, or otherwise showed no interest in repaying.1

How does the judge look at good faith?

The guidance is an internal policy for government attorneys. It does not bind the court, which makes its own decision on undue hardship, and you keep the burden of proof.1

Most courts use the Brunner test, which asks whether you cannot keep a minimal standard of living while repaying, whether that is likely to last, and whether you made good faith efforts in the past to repay. Some courts use a totality of the circumstances test instead. The Justice Department says its guidance applies under both. Federal Student Aid also lists good faith efforts to repay before filing among the factors courts may look at, and notes that creditors may be present to challenge the request.1 3

How do you show this on the attestation form?

The attestation form has a section on prior efforts to repay. It asks for the total you have paid, how many forbearances or deferments you applied for and the months spent in them, how many times you tried to contact your servicer or the Department of Education, and what you did to enroll in an income-driven plan. If you did not enroll, it asks for your reasons. It also asks for any other facts showing good faith.4

You sign the form under penalty of perjury, so work from records where you can and say when a figure is approximate.1