At the same time, the government is preparing to restart wage garnishment for borrowers in default as early as January (3). Millions of people are already more than 270 days behind on their loans, putting them at risk of having part of their paycheck seized after a 30-day notice.
Online, frustration is boiling over. One Reddit user wrote (4), “Mine will be nearly $500 a month which is literally impossible for me to pay. I just laugh at it now because simply no way I can afford that. If I tried, my parents and I would be dead before I pay even a quarter of what I owe. It’s a joke.”
Amid the tightening screws, however, a surprising escape hatch is opening. Student loans have long been considered nearly impossible to wipe out through bankruptcy — but that assumption might be outdated.
A shift is changing the odds
Borrowers who pursue bankruptcy relief are succeeding at rates few would have believed just a decade ago. An analysis by University of Utah law professor Jason Iuliano (5) found filers now manage to discharge some or all of their student debt 87% of the time through bankruptcy, up from 61% in 2017, largely due to a streamlined legal process introduced three years ago.
“That’s strikingly high when you think about the narrative being it’s impossible to discharge,” Iuliano told The New York Times (6). His findings were published this month in The American Bankruptcy Law Journal, following 15 years of research.
The shift comes as financial pressure on borrowers continues to grow. A survey from the Institute for College Access and Success found 42% of borrowers are forced to choose between student loan payments and basic necessities, while 20% are delinquent or already in default (7). Even though the Biden administration canceled $183.6 billion in loans for more than 5 million borrowers, broader forgiveness efforts have stalled (8).
For a small but growing number of borrowers, this changing landscape is already delivering relief. Amy Howdyshell, a 43-year-old licensed practical nurse in Virginia, recently had more than $78,000 in federal student loans discharged through bankruptcy, much of it tied to a for-profit school for a degree she never completed (9).
After her husband suffered serious medical issues, including a heart attack, the couple filed for bankruptcy in 2023. With help from an attorney experienced in student loan cases, Howdyshell successfully pursued a discharge, freeing her family from debt that had long blocked their ability to save for a home or retirement.
“Now I have the financial freedom to pursue my dreams of homeownership,” Howdyshell told The New York Times. “It was a scary process but worth the gamble.”
Cases like hers remain rare, Iuliano says, largely because many borrowers and their lawyers still don’t realize how much the odds have shifted.
