SoFi’s SEC Filing Says Its Private Student Loans Can Be Discharged in Bankruptcy

SoFi Technologies told federal securities regulators that its private student loans can be wiped out in bankruptcy under certain conditions, a quiet admission that cuts against one of the most repeated lines in personal finance.

The disclosure sits in SoFi's annual report (a Form 10-K filed with the SEC) for the fiscal year ending December 31, 2025. In the Risk Factors section, the company warns investors that its "private education loans may be discharged in bankruptcy in certain situations," including when a court finds the debt is not a qualified education loan or that repayment would cause undue hardship. SoFi adds that a private loan can also be discharged if the borrower dies or becomes disabled.

Why It Matters

Borrowers are routinely told private student loans are the one debt bankruptcy can't touch. That belief keeps people paying and keeps them from asking whether their specific loan even qualifies for the protection lenders imply is automatic. 

A lender can shape its marketing, but a public company has to disclose real risk to shareholders. SoFi's filing is that disclosure.

The Legal Reality

Federal law does not shield every education debt. Under 11 U.S.C. § 523(a)(8), only three categories survive bankruptcy without a special showing: government- or nonprofit-backed loans, an "educational benefit," and a "qualified education loan" as defined in 26 U.S.C. § 221(d)(1).

A private loan that fits none of the three can be discharged much like credit card debt with no undue hardship proof required.

What A Real Bankruptcy Attorney Looks For

Joshua Cohen, a consumer attorney known as The Student Loan Lawyer, says private loans are "still a bear to discharge," but that specific facts can push a loan outside § 523(a)(8)(B)'s protection — meaning it can be discharged simply by filing, no undue-hardship fight required.

His list of loans that often fall outside the definition:

• Money lent to a student who never earned a high school diploma or GED
• Loans for an unaccredited school or a non-degree program, "like a bar study loan or flight school that does not award a degree"
• Loans made above the school's cost of attendance
• Loans backed by a cosigner "who had no dependent relationship with the student such as grandparents, friends, neighbors, siblings," or even parents once the student was in graduate school.

Cohen notes the cost of attendance argument usually requires an adversary proceeding, "which can be hard fought and expensive," and that case law there isn't settled.

But he points to a quieter dynamic in borrowers' favor: "Most private lenders do not want published case law that differentiates private loans from federal loans." When the facts raise a real question for a judge, he says, "settlement is very likely."

"Most private lenders do not want published case law that differentiates private loans from federal loans."

For qualified loans, discharge still runs through an undue-hardship claim, where most courts apply the demanding Brunner test. A 2022 Justice Department memo told government lawyers to stop fighting these cases so hard, but that guidance covers federal loans, not private lenders like SoFi.

How This Connects

We've long covered why student loans rarely get discharged in bankruptcy and what borrowers should know about private student loans before signing.

With Americans carrying more than $1.8 trillion in student loan debt, the distinction between a "qualified" and non-qualified loan is not academic.

Our definitive guide to student loan debt walks through the wider picture, and if you're weighing a lender or a refinance, see our SoFi student loans review, our list of the best private student loan lenders, and the best student loan refinance lenders.

Also worth knowing: what really happens when you stop paying and the full list of ways to get student loan forgiveness.

SoFi isn't accused of doing anything wrong. This filing simply states the law and is required. But it's a useful receipt: the company holding the loan concedes to Wall Street what borrowers rarely hear. Whether any single loan can be discharged depends on how it was originated, so pull your original loan documents and ask a consumer bankruptcy attorney before assuming that "no" is the answer.

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