Can student loans be partially discharged in bankruptcy?

What is a partial discharge?

It is a middle outcome. The court discharges a portion of the student loan debt and you keep paying the remainder.1 2

Federal Student Aid describes the possible results once a court finds that repayment would cause undue hardship. Which one applies depends on the terms of the court's decision.3

When does the Justice Department support a partial discharge?

In a federal student loan case the other side is the government, and its attorneys work from published guidance. That guidance says they may recommend a partial discharge when you can make some payments while keeping a minimal standard of living but cannot make the full standard monthly payment.1 2

The starting point is a comparison of your allowable expenses, worked out with IRS standards, against your household gross income. If your expenses equal or exceed your income and you meet the other elements, the guidance treats a full discharge as appropriate.1

If you have enough left over to make the full payments your loan agreement requires, you have not met the undue hardship test. In between, where your income allows some payment but not the full required amount, the attorney is told to consider a partial discharge. The comparison generally uses the payment under a standard repayment plan, not the lower payment an income-driven plan might offer.1

The comparison is not limited to what you spend today. If you are going without things you need, such as your own housing, childcare or healthcare, the form lets you list the expenses you would have if those needs were met, and the attorney is to use them.1

How much would you still owe?

The guidance sets a ceiling, not a formula. A partial discharge should not leave a remaining balance larger than what your discretionary income lets you pay off in monthly payments over the remaining loan term.1

The actual figure in any case comes from the numbers on your attestation form, the position the government takes, and what the judge decides. The government's position does not bind the court.1

Does every court allow partial discharge?

No, and this is the part to check with a lawyer where you live. The statute does not say whether a court may discharge only part of a student loan.1

The Justice Department reports that several federal appeals courts have recognized partial discharge and that most lower courts without circuit authority have permitted it. It also cites an appellate panel that described a general rule against discharging parts of individual loans.1

The guidance does not replace the case law of your circuit. Government attorneys recommend a partial discharge only where it is appropriate and permissible under the law that governs your court.1 2

What do the government's own figures show?

The Justice Department published two progress reports on the process. In the first, dated November 16, 2023, it said 632 cases were filed in the first 10 months, and that in 99% of the cases where courts had entered orders or judgments, the government recommended and the court agreed to a full or partial discharge.4

Its July 17, 2024 update counted 1,220 cases filed from November 2022 through March 2024 and said 98% of the cases decided by courts in that period provided relief through a full or partial discharge.5

Neither report says how many of those discharges were partial. Both group full and partial discharges together, and both are now archived, so read them as a picture of the early years of the process, not as your odds.4 5

What do you still have to prove?

Everything. A partial discharge is not an easier test. Before any partial discharge, the debtor must have established every element of undue hardship.1

1. You file an adversary proceeding, a separate lawsuit inside your bankruptcy case.2
2. You complete the attestation form, signed under penalty of perjury, with documents that back up your income.1
3. The government's attorney reviews it against three conditions: you cannot repay now, that is likely to continue, and you acted in good faith in past attempts to repay.1
4. The attorney decides whether to recommend a full or partial discharge, and the bankruptcy judge makes the final decision.2

How do a home or retirement savings fit in?

Your assets are part of the analysis. The guidance says a partial discharge may be available to someone who can sell assets to pay part of the debt but cannot pay the rest while keeping a minimal standard of living.1

It also tells government attorneys not to give decisive weight to assets that are hard to turn into cash or are critical to your well-being, and says requests to liquidate a primary residence or a retirement account should be exceptionally rare. Courts disagree about how exempt property should count, so the weight given to a home or a retirement account depends on your court.1

Property that a bankruptcy trustee sells to pay your other creditors is not available to pay the student loan, and the guidance says it should not be considered.1