How does the Justice Department's student loan discharge process work?

What is the guidance, and who is it written for?

It is a memorandum dated November 17, 2022 that the Justice Department wrote, with the Department of Education, for its own attorneys. Cases about discharging a federal student loan are handled by the United States Attorney's office for the district where the bankruptcy is pending.2 3

The guidance names three goals: clear and consistent expectations that borrowers can understand with or without a lawyer, less burden through simpler fact gathering, and more cases in which the government agrees to the facts and recommends a discharge where the facts support it.2

It was written because, in the department's words, some borrowers had been deterred by the historically low probability of success and by the mistaken belief that student loans cannot be discharged at all.2

The U.S. Trustee Program's page on the guidance, updated March 17, 2026, still lists it together with an attestation form dated May 2025.3

What are the steps?

The process sits inside an ordinary bankruptcy case. It does not replace the lawsuit you have to file.

1. You file for bankruptcy and then file an adversary proceeding, a separate lawsuit inside the case, asking the court to find undue hardship.1
2. The government's attorney gives you the chance to complete the attestation form. The Department of Education supplies your account history and loan details, which are given to you with the form.2
3. You complete the form, sign it under penalty of perjury, and attach documents that back up your income, such as tax returns or paystubs. It goes to the government's attorney, not to the court, unless the court or an attorney directs otherwise.2 4
4. The attorney reviews it with the Department of Education and decides whether to recommend a full or partial discharge.1
5. If the attorney agrees, the two sides can put the agreed facts before the court and recommend a finding of undue hardship. The judge makes an independent decision.2

What does the government look at?

The guidance tells attorneys to recommend a discharge when three conditions are met. They track the tests that courts already use, and the guidance gives a method for each.2

Which details in the guidance matter most to borrowers?

Several instructions deal with situations that used to sink cases.

• Expenses above the IRS standard amounts are not fatal. A reasonable explanation is to be considered carefully and may be accepted.2
• If you are going without things you need, such as your own housing, childcare or healthcare, you can list the expenses you would have if those needs were met, and the attorney is to use them.2
• If you can afford some payment but not the full standard monthly payment, the attorney should consider a partial discharge.2
• Not enrolling in an income-driven repayment plan does not by itself show a lack of good faith, and any reasonable explanation is to be accepted.2
• Borrowers who did not engage with repayment because of possible misinformation from a servicer should not be disqualified for it, and attorneys are to look at the entire life of the loan.2
• Requests to liquidate a primary residence or a retirement account should be exceptionally rare.2

What happens if the government does not agree?

The lawsuit goes on. The court must make its own determination of undue hardship even if the creditor does not object, and you still carry the burden of proving every element of it.2

If the court finds undue hardship, a loan may be fully discharged, partially discharged, or left to be repaid on different terms such as a lower interest rate. If it does not discharge the loan, you can still ask your servicer about other repayment plans.5

What does the guidance not do?

It changes how the government argues its side. It does not change the law the court applies.

• It does not remove the undue hardship requirement, which is in the statute.6
• It does not make the lawsuit unnecessary. You still have to file an adversary proceeding.1
• It does not bind the judge. The government's position is not binding on the bankruptcy court, and you keep the burden of proving every element of undue hardship.2
• It does not replace the case law of your federal circuit, and it does not create rights you can enforce against the government.2
• It does not protect a borrower who willfully contrived a hardship or abused the student loan system.2

Which loans does the process cover?

The process is for federal student loan discharge cases, where the Justice Department represents the government. It is an internal policy for the department's own attorneys.1 2

Some federal loans are held by other loan holders. The Department of Education has told those holders that they may follow the same November 2022 process when they respond to undue hardship claims.7

A private lender is a different party and is not directed by the guidance. For private loans, the first question is whether the loan is protected by the statute at all.2 6