Discharging student loans in bankruptcy has been nearly impossible. There is potentially good news on the horizon. In bankruptcy, the Department of Justice works with the Department of Education and new guidance has been issued to help streamline the student loan discharge process. Until now, bankruptcy was generally an ineffective way to discharge student loan liabilities. if the guidance is implemented as intended, it will greatly increase the number of bankruptcy debtors that are eligible for discharge of their student loans.

As John Rao, Attorney with the National Consumer Law Center says, "the current undue hardship method of student loan discharge is random, arbitrary and unfair. The new guidance has the potential to provide meaningful relief. However, Rao cautions that "its effectiveness will depend on how it is implemented by the Department of Education and Justice."

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