Justice Department and Department of Education Announce a Fairer and More Accessible Bankruptcy Discharge Process for Student Loan Borrowers – Department of Justice

by | Nov 17, 2022 | Education

The Department of Justice, in close coordination with the Department of Education, announced today a new process for handling cases in which individuals seek to discharge their federal student loans in bankruptcy. The new process will help ensure consistent treatment of the discharge of federal student loans, reduce the burden on borrowers of pursuing such proceedings and make it easier to identify cases where discharge is appropriate. The Associate Attorney General distributed guidance outlining the new process to all U.S. Attorneys.Congress has set a higher bar for discharging student loan debt compared to other debt — borrowers who seek to discharge their loans through bankruptcy must demonstrate that they will suffer “undue hardship” unless the debt is discharged. Although the bankruptcy judge makes the final decision whether to grant a discharge, the new process announced today provides Justice Department attorneys with clear standards for recommending discharge to the judge without unnecessarily burdensome and time-consuming investigations. The new process will also help borrowers who did not think they could get relief through bankruptcy more easily identify whether they meet the criteria to seek a discharge.

“Today’s guidance outlines a better, fairer, more transparent process for student loan borrowers in bankruptcy,” said Associate Attorney General Vanita Gupta. “It will allow Justice Department attorneys to more easily identify cases in which we can recommend discharge of a borrower’s student loans. We are gratefu …

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