Available at SSRN: https://ssrn.com/abstract=6532660 or http://dx.doi.org/10.2139/ssrn.6532660
Pang, Belisa; Bruckner, Matthew A.; and Jiménez, Dalié. The Missing Cases: Student Loan Discharge in Bankruptcy After Reform (March 1, 2026).
Abstract:
Despite the 2022 DOJ Guidance designed to make student loan discharge in bankruptcy more accessible, barely any borrowers are using it. Using hand-coded court records from 240 cases, AI-assisted classification of case outcomes, credit bureau records, and a survey of 127 bankruptcy attorneys, the authors investigate why. Two intertwined problems emerge. First, the odds are worse than advertised: only about 56% of cases achieve full or partial discharge, far below the government's claimed success rate. Second, the process is expensive: attorneys typically charge thousands of dollars in flat fees, and 63% report that they cannot find clients who can afford to pay. The authors propose practical reforms—including better outcome data, standardized procedures, and alternative fee structures—that could expand access to student loan relief in bankruptcy without new legislation.
Summary:
One of the great mysteries following the Department of Justice's 2022 Student Loan Guidance has been why relatively few borrowers have sought bankruptcy discharges despite widespread publicity that the process had become substantially easier.
In The Missing Cases, Professors Belisa Pang, Matthew Bruckner, and Dalié Jiménez provide perhaps the most comprehensive empirical examination to date of that question. Drawing on hand-coded bankruptcy court records, AI-assisted outcome analysis, credit bureau data, and surveys of bankruptcy attorneys, they conclude that the problem is not simply borrower ignorance. Rather, the system itself continues to discourage litigation.
Their findings challenge several common assumptions.
Most notably, they report that only about 56% of filed student loan adversary proceedings resulted in either a full or partial discharge—significantly below the success rates often cited by the government. While that remains dramatically better than the pre-guidance era, it is hardly the near-certainty that some borrowers may have expected.
Even more significant may be the economics.
According to the attorney survey, most lawyers charge several thousand dollars to pursue a Student Loan Adversary Proceeding ("SLAP"), and nearly two-thirds reported that they frequently cannot find clients who can afford the representation. The result is a paradox: bankruptcy offers one of the few realistic opportunities for meaningful student loan relief, yet many of the borrowers who need that relief most cannot afford to pursue it.
Rather than recommending sweeping legislative reform, the authors instead propose practical improvements, including greater transparency regarding outcomes, more standardized procedures, and fee structures that reduce the financial barriers to bringing these cases.
Commentary:
This paper identifies real problems, but perhaps understates how much the procedural structure chosen by individual bankruptcy courts affects whether deserving borrowers ever file a SLAP in the first place.
Several bankruptcy courts have already recognized that student loan discharge litigation presents unusual challenges and have responded creatively.
The Southern District of Florida established its Student Loan Program (SLP):
https://www.flsb.uscourts.gov/student-loan-program-slp
The Northern District of Florida followed with its Student Loan Management Program (SLMP):
https://www.flnb.uscourts.gov/student-loan-management-program
Likewise, the Eastern District of Pennsylvania adopted a Student Loan Management Program through Local Rule:
https://www.paeb.uscourts.gov/student-loan-management-program-local-rule
These programs do not guarantee a discharge—and they should not—but they significantly reduce unnecessary procedural hurdles, encourage early exchange of financial information, facilitate communication among debtors, the Department of Justice, and the Department of Education, and help identify cases that are appropriate for consensual resolution under the DOJ Guidance.
Those innovations benefit everyone.
For debtors, they reduce uncertainty, delay, and expense.
For government attorneys, they provide consistent procedures and often avoid unnecessary litigation.
For bankruptcy courts, they encourage resolution of cases that otherwise might never be filed.
The private bar has also developed resources to help reduce the costs identified by the authors. Student Loanify, developed by Stretto (https://www.studentloanify.com/), provides technology designed to streamline the preparation and management of student loan discharge matters. Likewise, longtime student loan attorney Josh Cohen's Student Loan Toolbox (https://studentloantoolbox.com/) offers software, forms, practice guides, and educational resources to help attorneys efficiently represent borrowers. While these resources are no substitute for court-sponsored management programs or thoughtful judicial administration, they demonstrate that both the public and private sectors are working to make SLAPs more accessible and affordable.
Another reform deserves considerably more attention: presumptive "no-look" attorney fees for Student Loan Adversary Proceedings in Chapter 13 cases.
One of the largest barriers identified by the authors is economic. Student loan litigation requires attorney time, staff resources, discovery, client counseling, document collection, and significant uncertainty regarding compensation. When courts establish reasonable presumptive fees, both debtors and attorneys know in advance what representation will cost and how counsel will be compensated. That predictability makes it much more likely that experienced consumer bankruptcy attorneys will undertake these cases.
Several bankruptcy courts have already adopted presumptive fees for Chapter 13 SLAPs, recognizing that these proceedings benefit debtors, creditors, and the bankruptcy system as a whole by addressing student loan issues while the bankruptcy case remains pending.
Unfortunately, the bankruptcy courts in North Carolina have thus far declined to adopt such a procedure despite proposals from members of the consumer bankruptcy bar. That is unfortunate. A presumptive fee would not make these cases automatic, nor would it guarantee success. It would simply recognize that meaningful representation requires meaningful compensation and would remove one of the principal barriers identified in this important study.
There remains another obstacle that empirical studies are less able to quantify.
Even where the Department of Justice affirmatively concludes that repayment would constitute an undue hardship—and actively joins the debtor in requesting a discharge rather than merely allowing a default judgment—a handful of activist judges have nevertheless rejected those consensual stipulations.
Those decisions create uncertainty that extends well beyond the individual case. From a practical standpoint, appealing such denials is extraordinarily difficult. The procedural posture is unusual, the standard of review may be unfavorable, and the expense of an appeal often exceeds what most debtors can bear.
There is also a broader institutional concern.
The modern DOJ Guidance did not emerge overnight. Its origins can be traced to discussions that began during the first Trump Administration in 2018, ultimately culminating in the bipartisan 2022 Guidance adopted by the Department of Justice and Department of Education. To its credit, the current Administration has continued to implement that framework and, if anything, appears to have an even stronger nationwide record of agreeing that appropriate cases satisfy the undue hardship standard.
That bipartisan continuity has been one of the great success stories in consumer bankruptcy over the past several years.
At the same time, repeatedly forcing the Department of Justice to defend agreed-upon undue hardship stipulations before skeptical judges risks pushing the program beyond its practical limits. If carefully negotiated stipulations supported by the agencies charged with administering the federal student loan system are nevertheless rejected, one cannot assume that future administrations—of either political party—will continue devoting the substantial time and resources necessary to negotiate those agreements.
Perhaps the most encouraging aspect of The Missing Cases is that most of the solutions do not require Congress to act.
- Bankruptcy courts can establish Student Loan Management Programs.
- Courts can approve predictable presumptive fees for SLAPs.
- Judges can encourage standardized procedures and transparency.
- Technology and practice-management resources can continue lowering the costs and burdens associated with these cases.
Together, those relatively modest procedural improvements could dramatically expand access to bankruptcy relief for borrowers experiencing genuine undue hardship while preserving the individualized analysis required by § 523(a)(8).
The Missing Cases demonstrates that the principal barriers to student loan discharge are no longer primarily doctrinal. Increasingly, they are procedural, economic, and institutional. Fortunately, those are problems that bankruptcy judges, court administrators, practitioners, technology providers, and the Department of Justice all have the ability—and hopefully the willingness—to solve.
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