Does the New Trump Administration Policy Affect Bankruptcy for Student Loans?

 Posted on April 08, 2026 in Student Loans

It’s typical of most people going through higher education to take out thousands of dollars of student loan debt. We do it almost without thinking. Loan forgiveness was an option before, but new administrative changes have altered or ended various aspects of student loan forgiveness and repayment. If your student loans are making you feel like you’re drowning, you may have options. Bankruptcy was a viable option for some student loans before. Is it still?

Our Wise County, TX bankruptcy attorneys are ready to help you understand recent changes and how they may affect you.

Has the New Administration Changed the Rules on Student Loan Bankruptcy?

There have been substantial changes in student loan repayment in general in 2026. The Biden administration's SAVE repayment plan, which gave millions of borrowers very low monthly payments, is more or less phased out. Borrowers who relied on that plan are now facing higher payments or scrambling to enroll in a new option before deadlines hit. The current administration is also restarting collection on defaulted loans. For many people, this makes the financial squeeze feel a lot more immediate.

The good news is that if you were previously considering student loan bankruptcy, it’s still a viable route for many. Administrative updates haven’t put up roadblocks to the procedure or who’s eligible. U.S. law, under 11 U.S.C. § 523(a)(8), outlines the legal standard for discharging student loans in bankruptcy. Under this law, student loans can usually be removed via bankruptcy if you can show that repaying them would cause "undue hardship" to you and your dependents.

There is also a borrower-friendly process introduced previously by the Department of Justice and Department of Education that’s still in place. People who file for bankruptcy can complete a form documenting their financial situation. If the government agrees that repayment would be an "undue" hardship, it recommends to the court that your loans be discharged, either fully or partially.

Who Is Likely To Qualify for a Student Loan Discharge?

The reality is that very few people will actually be approved for student loan discharge. It’s worth discussing your situation with a bankruptcy lawyer, but don’t expect this to be an automatic solution.

To get approved for student loan discharge, you file something called an "adversary proceeding," which is a separate lawsuit within your bankruptcy case. To succeed, you generally need to show three things:

• You cannot maintain a basic standard of living if you are forced to repay the loans right now.
• Financial hardship is likely to continue for a significant part of the remaining loan repayment period.
• You have made a good-faith effort to repay the loans in the past.

The process you use depends on what kind of loans you have. Federal loans follow the DOJ attestation process mentioned before. If the government agrees with your hardship claim, it recommends discharge to the court.

With private loans, you’re dealing directly with a private lender, not the government, and in rare cases, they may actually be dischargeable without proving hardship at all in some cases. Some private loans that do not meet the legal definition of a "qualified education loan" (for example, loans exceeding the cost of attendance or for non-eligible schools) may be dischargeable without proving undue hardship. An attorney can help you figure out which category your loans fall into and what strategy makes the most sense.

Most people have never even tried to discharge their student loans in bankruptcy because of a widespread belief that it is simply impossible. While it’s the exception to the rule, if you get approved, it can provide significant financial relief.

Is Now a Good Time To Look Into Bankruptcy for Student Loans?

The process that makes loan discharge accessible is still active, but there is no guarantee the current policies will stay in place long-term. If you’re hoping for loan discharge in your bankruptcy filing, you should speak with a bankruptcy attorney. You may be able to get rid of your student debt in one go if you’re approved.

Given the low approval rate, though, you should have a backup plan. If your loans aren't discharged, a bankruptcy lawyer can help you know if you’re actually on the best repayment plan. They can also guide you through bankruptcy for the rest of your debts. A better repayment plan and lower interest rates on your other debts can make a big difference, even if you don’t get your student loans discharged.

Call a Parker County, TX Bankruptcy Attorney Today

If you are dealing with student loan debt and wondering whether bankruptcy could help, contact Acker Warren P.C. for a free consultation. Every client speaks directly with a lawyer, not a paralegal. Our Wise County, TX bankruptcy lawyers even handle cases completely virtually if needed, with an extremely fast turnaround time. Call 817-752-9033 to get started.