Very rarely can student loans be discharged in bankruptcy. Just because they are noncollectable now does not mean they will always be, unless you are permanently disabled. You must meet the Brunner Test.
The Brunner Test
In most states, student loan borrowers must prove undue hardship by meeting all three prongs on the Brunner test. These three elements are:
Cannot maintain a minimal standard of living. If forced to repay the student loan, the borrower cannot maintain, based on current income and expenses, a minimal standard of living for his or her family. If you have federal student loans, the court will consider your eligibility for repayment plans —which are quite generous for low-income borrowers—in calculating the true cost of repayment. (For more information on federal loan repayment plan, see the articles in our Options for Repaying Student Loans topic area.)
Borrowers of private student loans do not qualify for the federal repayment programs, which means they have fewer repayment options and often have an easier time proving this element.
Situation will continue. This situation is likely to continue for most of the repayment period.
Good faith effort to repay. The borrower made a good faith effort to repay the loans. Again, for federal loan borrowers, the borrower's use of available federal repayment plans is taken into account in assessing "good faith." Private loan borrowers will have an easier time proving this element because they do not have access to generous repayment plans.
