What are the undue hardship presumptions for student loans?

What does undue hardship mean, and where do the presumptions fit?

Undue hardship has no single test in the courts. Federal Student Aid says courts may look at whether repaying would leave you unable to keep a minimal standard of living, whether that will continue for a significant part of the repayment period, and whether you made good faith efforts to repay. You ask for it in a separate lawsuit inside the case, called an adversary proceeding.3 4

For federal loans, government attorneys recommend discharge when three conditions are met: you cannot repay now, that inability is likely to continue, and you acted in good faith. The presumptions deal with the second condition only. They come from Justice Department guidance for its own attorneys, not from the statute, and the judge still decides.2

What are the presumptions, and what does the form ask about each?

You claim them on the attestation form, in the item that lists the reasons your finances should be presumed unlikely to improve. The form says to answer all that apply.5

Which presumptions depend only on dates?

Two of them. The age presumption turns on whether you are age 65 or older. The guidance attaches no income test or retirement requirement to it, though you still have to meet the other conditions separately.2

The time presumption applies when the loan has been in a payment status other than in-school for at least ten years. If you consolidated, the time in repayment on the original underlying loans counts.2

How does the disability presumption work?

The wording is a disability or chronic injury that affects your income potential. The test is the effect on your ability to earn, and the guidance does not list qualifying conditions.2

Proof is handled gently. You may submit information from a treating physician, and it is to be considered carefully if you do, but you are not required to. The presumption may be applied even without a formal medical opinion.2

This is not the same as the Department of Education's total and permanent disability discharge, which has its own requirements. The guidance says the existence of that program generally should not stop you from showing a future inability to pay, and that a past denial does not decide the question.2

How do the unemployment and no-degree presumptions work?

The unemployment presumption looks back over a decade: unemployed for at least five of the last ten years. The wording does not say the years must be consecutive. The form asks you to explain your efforts to find work.2 5

The no-degree presumption applies when you did not obtain the degree the loan was taken out for. The form asks how not finishing has limited your earning capacity.2 5

If your school closed, say so. The form has a separate line for a degree pursued at an institution that is now closed, and the guidance says a closure that has hurt your earning capacity can support the government agreeing with you even without a presumption.5 2

Should you claim more than one?

Yes, if more than one is true. The form advises you to disclose every circumstance that applies and not to rely on a single presumption.2

The form is signed under penalty of perjury, so check only what is accurate and describe it carefully.5

What are the limits, and what if none of them fits you?

A presumption can be rebutted, though the guidance says that will likely be uncommon and must rest on concrete facts, not conjecture. Its example is a borrower without a degree who has received job offers paying significantly more than their current income.2

A presumption also does not shift the burden of proof. Before the court you still have to prove every element of undue hardship, and the government's position does not bind the judge.2

If none of the presumptions fits, you can still show that your situation is unlikely to improve. The form lists further reasons you can give.2

• You are not currently employed.5
• You are employed but cannot get work in the field you trained for.5
• You are employed, but your income is too low to pay the loans and unlikely to rise enough.5
• You have a significant history of unemployment that falls short of the presumption.2
• Other circumstances that you explain in your own words.5