Undue hardship is the standard test used by bankruptcy courts in deciding whether to discharge the obligation on student loans.
The following three conditions must be satisfied in order to discharge (forgive) a student loan:
- the debtor cannot maintain––based on current income and expenses––a minimal standard of living if forced to repay the loans;
- there are indications that the state of affairs is likely to persist for a significant portion of the repayment period;
- the debtor made good faith efforts to repay the loans.