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Bankruptcy can offer Black student-loan borrowers a path to a financial fresh start, but it does not automatically erase student loans—and Chapter 7 eligibility can present a separate hurdle. Under current federal law, covered student loans generally survive bankruptcy unless a borrower proves undue hardship. A 2026 comment by Adji Ostin in the Emory Bankruptcy Developments Journal argues that treating student loans as non-consumer debt for the Chapter 7 means test could reduce one barrier. That is a proposed reform, not a settled nationwide rule.
Can student loans be discharged in bankruptcy?
Sometimes. Bankruptcy Code § 523(a)(8) generally excepts covered student loans from discharge unless the borrower establishes that repayment would impose an undue hardship. This is not an absolute bar: a borrower can ask the bankruptcy court to discharge eligible student debt by bringing an adversary proceeding, a separate lawsuit within the bankruptcy case.
The outcome depends on the borrower’s circumstances and the court’s applicable legal test. Filing bankruptcy alone does not discharge student debt, and a general discharge of other debts does not automatically resolve it.
What does “undue hardship” mean?
The Department of Justice’s November 2022 guidance describes the Brunner test, used in many jurisdictions, as requiring a borrower to show three things:
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- Repaying the loans would prevent the borrower from maintaining a minimal standard of living.
- The borrower’s financial circumstances are likely to persist for a significant portion of the repayment period.
- The borrower has made good-faith efforts to repay.
The Department of Education’s August 5, 2024 update says the federal approach considers past, present, and future financial circumstances and is intended to work in both Brunner and totality-of-the-circumstances jurisdictions. These federal guidelines inform the government’s litigation positions; they did not amend the Bankruptcy Code and do not guarantee that a court will discharge a particular borrower’s loans.
Why can Chapter 7 eligibility be another obstacle?
Student-loan discharge and Chapter 7 eligibility are distinct questions. Even a borrower seeking relief from loans through an undue-hardship proceeding may face the Chapter 7 means test, which can act as an additional gate for some debtors. The test helps determine whether a debtor qualifies for Chapter 7 or whether the case may be treated as an abuse of that chapter.
The classification of debt as consumer or non-consumer can matter to the means-test analysis. Ostin’s 2026 comment argues that student loans should be classified as non-consumer debt for this purpose. The comment’s available abstract presents that classification as a reform proposal; it does not establish a nationwide rule. The detailed tests courts use to classify debt can vary, and the comment’s full legal analysis and footnotes are not available here to verify competing approaches.
That distinction matters to borrowers because the means test can affect access to Chapter 7, while the undue-hardship standard governs whether covered student loans can be discharged. A change to the former would not itself eliminate the latter.
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What are the differences between Chapter 7 and Chapter 13?
| Feature | Chapter 7 | Chapter 13 |
|---|---|---|
| Basic structure | Liquidation of nonexempt assets | Installment payments under a court-confirmed repayment plan |
| Means-test role | Eligibility is subject to a means-test gate | The Chapter 7 means-test gate does not determine access to this chapter in the same way |
| Student-loan discharge | Covered loans generally require a separate undue-hardship determination | A repayment plan does not by itself establish that covered loans are discharged; undue hardship remains a separate issue |
| Individual result | Depends on eligibility, applicable exemptions, assets, and any student-loan adversary proceeding | Depends on the debtor’s circumstances and the confirmed plan; no general outcome is established here |
Neither chapter is automatically the better option. The consequences depend on eligibility, the assets and exemptions involved, the plan or liquidation process, and whether the borrower pursues an undue-hardship finding for student loans.
What does the evidence say about Black borrowers and bankruptcy?
Ostin’s comment says Black debtors file for bankruptcy at twice their share of the general population. A Society of Actuaries Research Institute report published in 2022 separately reviews that finding and related disparities, but the figure should be read as a summary of prior research, not as a current annual count or a statistic specific to Black student-loan borrowers. The judiciary’s aggregate filing report does not provide race-specific figures in the cited material.
A 2020 Journal of Law and Economics paper, “Race and Bankruptcy: Explaining Racial Disparities in Consumer Bankruptcy,” reports greater Chapter 13 selection among African American filers than among other debtors. That is a finding from the paper’s own data and methods, not a current-year count. The available figures do not establish how often Black student-loan borrowers file bankruptcy, qualify for Chapter 7, or obtain student-loan discharges.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What do the national bankruptcy totals show—and not show?
The Administrative Office of the U.S. Courts recorded 540,600 consumer bankruptcy petitions in 2025: 62 percent were Chapter 7 and 38 percent Chapter 13. These totals describe consumer cases nationally. They do not identify filers by race, student-loan status, or discharge outcome, so they cannot show whether Black borrowers with student debt fare differently.
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What would the proposed non-consumer classification change?
Ostin’s proposal is aimed at the Chapter 7 means-test gate, not at rewriting the undue-hardship standard. If student loans were treated as non-consumer debt for means-test purposes, that could affect how the means test applies to some debtors. The available excerpt does not establish the exact legal mechanism, how a court would apply the proposal, or its effects on individual eligibility. It should therefore be understood as an argument for reform, not advice that a borrower’s student loans currently count as non-consumer debt.
For a borrower considering bankruptcy, the practical questions are separate: whether Chapter 7 is available under the applicable rules, what assets or repayment obligations are at stake, and whether the facts support an undue-hardship case. A bankruptcy attorney can assess those questions under current law in the borrower’s jurisdiction.
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