Student Loan Bankruptcy Discharge Cases Grow Under Fed Guidance

Federal student loan borrowers are increasingly taking advantage of an administrative policy shift to discharge overly burdensome education debts in bankruptcy, the departments of Justice and Education said.

Jointly coordinated guidance introduced by the federal agencies in November 2022 to streamline and simplify a notoriously difficult debt discharge procedure continues to grow in usage among consumer debtors, they said in a release Wednesday.

Since the guidance was rolled out through the end of March this year, a total of 1,220 proceedings have been initiated by bankrupt federal student borrowers to wipe away some or all of those liabilities. That figure ...