# Griffith v. Cleveland State University Student Loans

> United States Bankruptcy Court, N.D. Texas · June 30, 2021

URL: https://www.frixlaw.com/law-library/cases/10462364

## Case

- **Court:** United States Bankruptcy Court, N.D. Texas
- **Decided:** June 30, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10462364

## How later opinions describe it (automated extraction)

- stating that the debtor’s good faith is “interpreted in light of his ability to pay”

## Opinion text

RE BANER IS. CLERK, U.S. BANKRUPTCY COURT
[IS &, “EX NORTHERN DISTRICT OF TEXAS
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Fi ae THE DATE OF ENTRY IS ON
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The following constitutes the ruling of the court and has the force and effect therein described.

Signed June 30, 2021 Ded / ee
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In re: §
§
Robin Griffith, § Case No. 17-31905-hdh7
§
Debtor. §
□
§
Robin Griffith, §
§
Plaintiff, §
§
v. § Adv. No. 17-03051-hdh
§
Cleveland State University Student §
Loans, et al., §
§
Defendants. §
FINDINGS OF FACT AND CONCLUSIONS OF LAW.
In this action, Robin Griffith (the “Debtor”) is seeking a discharge of her student loan
obligations pursuant to section 523(a)(8) of the Bankruptcy Code. To obtain such a discharge, she
must show that repayment of her student loans would impose an undue hardship on her. This case

largely comes down to personal decisions the Debtor has made and the impact of those decisions
on her finances. While the Court understands the Debtor’s decisions and finds some of them
admirable, on the whole, they are not compatible with obtaining a discharge of student loan
obligations. The Court has sympathy for the Debtor’s situation, but based on these Findings of
Fact and Conclusions of Law, the Court determines that the Debtor has not met her burden of

showing undue hardship under the controlling standard in the Fifth Circuit for interpreting and
applying 11 U.S.C. § 523(a)(8).
Jurisdiction and Venue
This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1334.
This adversary proceeding involves a core matter under 28 U.S.C. § 157(b)(2)(A) and (I), as the
adversary proceeding involves a determination as to the dischargeability of a particular debt.
Venue for this adversary proceeding is proper pursuant to 28 U.S.C. § 1409(a).
Procedural History
On May 26, 2017, the Debtor filed her Complaint to Determine Dischargeability of Debt

[Docket No. 1] (the “Original Complaint”) seeking a determination that repayment of her student
loans would impose an undue hardship and they may therefore be discharged under 11 U.S.C.
§ 523(a)(8). The Original Complaint named six defendants: (1) Cleveland State University
Student Loans (“CSU”), (2) the United States Department of Education (the “DOE”), (3) Great
Lakes Higher Education Corporation (“Great Lakes”), (4) FedLoan Servicing, (5) the Missouri
Department of Higher Education, and (6) Washington University (“WU”).
In late July 2017, the Educational Credit Management Corporation (“ECMC”) filed
motions to substitute in this adversary proceeding as a defendant in the place of the Missouri
Department of Higher Education1 and Great Lakes.2 Both of these substitution motions were
granted by agreed order.3
On August 22, 2017, the Debtor filed the Amended Complaint to Determine
Dischargeability of Debt [Docket No. 31] (the “Amended Complaint”). The Amended Complaint
seeks the same relief as the Original Complaint but (i) named the original defendants, (ii) revised

FedLoan Servicing to “Pennsylvania Higher Ed. Assistance Agency (aka: FedLoan Servicing)”
(referred to herein as “PHEAA”), and (iii) added two additional defendants: (1) the Ohio
Department of Higher Education and (2) ECMC.
PHEAA subsequently filed a motion to dismiss,4 which was granted after PHEAA made
the admission that it does not hold the debt at issue and is not asserting a claim against the Debtor.5
In light of the substitutions and the order dismissing the Amended Complaint against PHEAA, the
defendants remaining in this lawsuit are CSU, the DOE, ECMC, and WU (the “Remaining
Defendants”).6

1 Motion of Educational Credit Management Corporation, Under B.R. 7025, for Substitution as Defendant in the
Place of Named Defendant Missouri Department of Higher Education [Docket No. 5].
2 Motion of Educational Credit Management Corporation, Under B.R. 7025, for Substitution as a Defendant in the
Place of Named Defendant Great Lakes Higher Education Corporation [Docket No. 8].
3 Agreed Order Granting the Unopposed Motion of Educational Credit Management Corporation, Under B.R. 7025,
for Substitution as Defendant in the Place of Named Defendant Missouri Department of Higher Education [Docket
No. 21]; Agreed Order Granting the Motion of Educational Credit Management Corporation, Under B.R. 7025, for
Substitution as Defendant in the Place of Named Defendant Great Lakes Higher Education Corporation [Docket No.
29].
4 Defendant Pennsylvania Higher Education Assistance Agency’s Motion to Dismiss Amended Complaint [Docket
No. 36].
5 See Order Granting Motion to Dismiss Defendant Pennsylvania Higher Education Assistance Agency as Defendant
in this Adversary Proceeding [Docket No. 52].
6 The Ohio Department of Higher Education is not listed as a Remaining Defendant because the allegation in the
Amended Complaint is that the loans that were held by the Ohio Department of Higher Education and serviced by
Great Lakes have been transferred to ECMC.
After extensive discovery and several delays in this adversary proceeding, the Remaining
Defendants began filing motions for summary judgment in June 2019,7 which the Court denied in
February 2020.8 Shortly thereafter, the Debtor filed two motions for summary judgment: (1) the
Plaintiff’s Motion for Summary Judgment of Perkins Loans [Docket No. 175] seeking cancellation
of certain “Perkins Loans” owed to CSU and WU pursuant to 34 C.F.R. 674.56(a)(1), and (2) the

Plaintiff’s Motion for Summary Judgment of Private Student Loans [Docket No. 176] seeking the
discharge of certain private student loans held by WU. As the Court explained in its order denying
these motions, the relief requested went beyond the scope of the Amended Complaint.9
On May 20, 2021, the parties filed a Joint Pretrial Order [Docket No. 226] in which they
were able to stipulate to most of the facts relevant to this action.10
The Court held trial in this matter on June 9 and 10, 2021 and took the matter under brief
advisement. The following are the Court’s Findings of Fact and Conclusions of Law, issued
pursuant to Rule 52 of the Federal Rules of Civil Procedure, as made applicable in adversary
proceedings by Federal Rule of Bankruptcy Procedure 7052.11

Relevant Factual Background
Beginning in the fall of 2000, the Debtor attended Mineral Area College, where she
obtained an associate’s degree in psychology in May 2002. She subsequently attended
Washington University in St. Louis, where she received a bachelor’s degree in psychology in May

7 The United States of America’s Motion for Summary Judgment [Docket No. 111]; The Washington University’s
Motion for Summary Judgment [Docket No. 114]; Motion of Defendant Educational Credit Management Corporation
for Summary Judgment [Docket No. 117]; Cleveland State University’s Motion for Summary Judgment and Brief in
Support [Docket No. 143].
8 Order Denying Defendants’ Motions for Summary Judgment [Docket No. 173].
9 Order Denying Plaintiff’s Motions for Summary Judgment [Docket No. 182].
10 The Debtor was representing herself until late 2019 when Stephen Cochell began representing her pro bono. Since
then, Mr. Cochell has been helpful to this process, and the Court appreciates his involvement.
11 Any Finding of Fact more properly construed as a Conclusion of Law shall be considered as such, and vice versa.
2005. From the fall of 2006 to the conclusion of the spring semester in 2011, the Debtor attended
Cleveland State University. While at CSU, the Debtor obtained a master’s degree in clinical
psychology and began coursework for a doctoral degree.
To fund her education, the Debtor borrowed funds from several different lenders, and those
loans are currently held by the Remaining Defendants. As of the date of filing of the Amended

Complaint, the Debtor estimated that she owes the Remaining Defendants approximately $218,000
in principal, interest, and fees.
While in school, the Debtor was able to work full time as a psychometrist, testing patients
for neurological disorders. She held this position from 2008 until July 2014, when she moved
from Cleveland to Dallas to live with her partner (referred to herein by his initials, “D.G.”). After
she moved to Texas, the Debtor found employment at Baylor University Medical Center as a
psychometrist.
In late 2014, the Debtor experienced two important events: first, D.G. proposed to her;
second, shortly after the proposal, D.G. was diagnosed with Parkinson’s disease. Prior to his

diagnosis, D.G. was a practicing attorney, but he is now unable to maintain employment and
receives disability income from the Social Security Administration.
In July 2019, the Debtor moved to Virginia to be closer to her adult son who could provide
emotional support for the Debtor and also provide physical assistance with the care of D.G. This
voluntary move both decreased the Debtor’s income and increased the Debtor’s expenses. The
Debtor’s expenses increased partially because the cost of living appears to be generally higher in
the area she moved to in Virginia. The Debtor’s income decreased because the Debtor has had
difficulty finding an acceptable job that would pay as much as the job she left in Dallas to make
the move to Virginia.
Shortly after moving to Virginia, the Debtor found a job as a psychometrist with George
Washington Medical Faculty Associates with an annual salary of $54,000. However, the Debtor
only held this job for about a month. In the spring of 2020, the Debtor once again found

employment, but was terminated during the onboarding process due to the sudden onset of the
COVID-19 pandemic. Since then, the Debtor has not been able to find full-time employment as a
psychometrist. The Debtor does receive unemployment benefits and has attempted to supplement
her income in several ways. She recently obtained her real estate license in Virginia and began
working for Keller Williams, a realty company. However, the Debtor has only received income
from two sales in the fifteen months since she took on this new role. The Debtor has also been
able to find part-time contract work as a psychometrist.
As of the time of trial, the Debtor stated that she is not currently willing to relocate D.G.
to a nursing home. She testified that there is nothing to indicate that she cannot be employed in

the future, but she also testified that she does not believe she can return to work full-time at present,
as she needs to care for D.G.
Legal Analysis
Bankruptcy Code section 523(a)(8) prevents the discharge of student loan debt “unless
excepting such debt from discharge . . . would impose an undue hardship on the debtor and the
debtor’s dependents.” The Debtor’s student loans identified in the Amended Complaint each
constitute “an educational . . . loan made, insured, or guaranteed by a governmental unit, or made
under any program funded in whole or in part by a governmental unit or nonprofit institution” as
provided by 11 U.S.C. § 523(a)(8)(A)(i).12 In order to discharge such a debt, debtors must show
that the debt, if excepted from discharge, would impose an “undue hardship” on the debtor and the
debtor’s dependents.
“Undue hardship” is not defined by the Bankruptcy Code. However, this Court is bound
by Fifth Circuit precedent requiring a debtor seeking an “undue hardship” discharge of student

loans under section 523(a)(8) to show:
(1) that the debtor cannot maintain, based on current income and expenses, a
“minimal” standard of living for himself and his dependents if forced to repay the
loans;

(2) that additional circumstances exist indicating that this state of affairs is likely to
persist for a significant portion of the repayment period of the student loans; and

(3) that the debtor has made good faith efforts to repay the loans.

United States Dep’t of Educ. v. Gerhardt (In re Gerhardt), 348 F.3d 89, 91 (5th Cir. 2003) (citing
Brunner v. New York State Higher Educ. Services Corp., 831 F.2d 395, 396 (2d Cir. 1987)). This
three-prong test is commonly referred to as the Brunner test and is the controlling law in this
Circuit, as construed in Gerhardt. Thomas v. Dep’t of Educ. (In re Thomas), 931 F.3d 449 (5th
Cir. 2019). At trial, the debtor has the burden of proof to show that all three prongs of the Brunner
test have been met. Kettler v. Great Lakes Higher Educ. Serving Corp. (In re Kettler), 256 B.R.
719, 723 (Bankr. S.D. Tex. 2000).
Prong 1: Ability to Maintain a Minimal Standard of Living
The first prong of the Brunner test requires a showing that the debtor cannot maintain,
based on current income and expenses, a “minimal” standard of living for herself and her

12 On page 3 of the Amended Complaint, the Debtor summarizes her student loans into categories of (1) Direct Stafford
Unsubsidized, (2) Direct Stafford Subsidized, (3) FFEL Stafford Subsidized, (4) FFEL Stafford Unsubsidized, and
(5) Federal Perkins (the “Student Loans”). On page 4 of the Amended Complaint, the Debtor stipulates that the
Student Loans are nondischargeable unless their exception to discharge would constitute an undue hardship to the
Debtor.
dependents if forced to repay the loans. Tight finances are not sufficient. The debtor must
establish that she cannot afford reasonably necessary living expenses if she is forced to repay her
student loans. Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66, 71 (Bankr. M.D.
La. 2006). For the purposes of this analysis, a reasonably necessary living expense is one that the
debtor cannot cut from her budget while maintaining a minimal standard of living. Id. The

Bankruptcy Code does not, however, require that the debtor live in abject poverty before a student
loan may be discharged. Little v. United States Dep’t of Educ. (In re Little), 607 B.R. 853, 859
(Bankr. N.D. Tex. 2019).
In the past few years, the Debtor and her partner have maintained a fairly high level of
income.13 The Debtor and her partner had combined gross income of $76,568.11 in 2017,
$79,470.23 in 2018, and $76,653.10 in 2019. The Debtor and her partner had a total household
income of $66,707.10 in 2020 after deducting D.G.’s insurance payment deducted by Medicare.
In 2021, D.G. will be paid $31,254 in Social Security Disability without a deduction for
Medicare. The Debtor continues to receive income from unemployment benefits and her part-time

contract work as a psychometrist. She is also working as a realtor and has received government
stimulus during 2021.
The Debtor’s expenses over the past few years have also been high. The Debtor’s high
expenses, however, appear to be the result of decisions the Debtor has made rather than necessity.
When the Debtor moved from Cleveland to Dallas, for instance, she kept her apartment in
Cleveland for almost two years rather than trying to terminate the lease early and avoid
unnecessary expense. The Debtor also chose to provide financial support to her adult child at one
point. In 2017, the Debtor purchased a 2015 Cadillac SRX. While the Court understands the

13 To put the Debtor’s income in perspective, the federal poverty level for a household of two is currently $17,420.
Debtor had need for a larger vehicle and used this single vehicle to replace two others, the Debtor
spent more on the vehicle and an expensive maintenance plan than was necessary. The Debtor
also spends more on discretionary expenses such as entertainment than is necessary.14
The Debtor’s current budget still includes expenses that are well above what would be
necessary to maintain a minimal standard of living. Plaintiff’s Exhibit 36 is a budget showing

annualized expenses of $81,453.60. This includes monthly expenses of $2,540 for rent, $620 for
a car payment, $179.80 for a car maintenance plan, $85 for tolls, $275 for phones, and $550 for
vitamins. Without belaboring the point, the Court finds, based on the evidence presented, that
expenses such as these could be drastically reduced while still maintaining a minimal standard of
living.
Based on the stipulations and evidence presented at trial regarding the Debtor’s income,
expenses, and the payments options for her Student Loans, the Court finds the Debtor could
maintain a minimal standard of living if forced to repay the Student Loans and therefore does not
satisfy the first prong of the Brunner test for undue hardship.

Prong 2: Additional Circumstances
The second prong of the Brunner test requires a showing that additional circumstances
exist indicating that the debtor’s state of affairs is likely to persist for a significant portion of the
repayment period of the student loans. The “additional circumstances” that adversely affect a
debtor’s future earning potential must have either been not present at the time the debtor applied
for the loans or were present but have since been exacerbated. In re Gerhardt, 348 F.3d at 92. In
this Circuit, the second prong of the Brunner test is especially difficult to meet. See id. (“This
second aspect of the [Brunner] test is meant to be a ‘demanding requirement.’”) (quoting Brightful

14 See, e.g., Joint Pretrial Order at ¶¶ 46, 47, 50, 51, 54, 55, 58, and 59.
v. Pa. Higher Educ. Assistance Agency (In re Brightful), 267 F.3d 324, 328 (3d Cir. 2001)). The
Fifth Circuit has indicated that a showing that the debtor is currently in financial straits is not
enough—the circumstances must be outside the debtor’s control and result in a “total incapacity”
to pay debts now and into the future. Id.
The Debtor is well-educated and highly qualified for positions as a psychometrist, and she

has been able to quickly find employment in the past. While she is having difficulty finding
employment at the moment, this appears to be due to the COVID-19 pandemic and not likely to
persist for a significant portion of the repayment period of her Student Loans. The Debtor has no
health issues that affect her ability to obtain employment or repay her student loan debt. The
Debtor has an adult son, but neither she nor her partner have any minor children living with them.
While the Debtor has expressed some uncertainty as to her ability to obtain full-time
employment while caring for her partner, this is based partly on the Debtor’s preference for caring
for her partner herself rather than utilizing the services of a nursing home. While the Court
understands the Debtor’s desire to care for her partner personally, this is not outside the debtor’s

control and does not result in a “total incapacity” to pay debts now and into the future. The Court
finds that the Debtor does not satisfy the second prong of the Brunner test for undue hardship.
Prong 3: A Good Faith Effort to Repay the Loans
The third prong of the Brunner test requires a showing that the debtor has made good faith
efforts to repay the loans. While this inquiry overlaps with the other prongs, “the primary focus
of the third prong is on the debtor’s repayment efforts.” In re Little, 607 B.R. at 861. Accordingly,
courts take note of the debtor’s efforts to put herself in a position that would enable her to repay
her loans, specifically, “efforts to obtain employment, maximize income, and minimize expenses.”
Russ v. Tex. Guaranteed Student Loan Corp., (In re Russ), 365 B.R. 640, 645 (Bankr. N.D. Tex.
2007). Attempts to consolidate loans may also contribute to a good faith finding, but do not, in
and of themselves, constitute a good faith effort to repay the loans. In re Salyer, 348 B.R. at 72.
Debtors are expected to attempt payments according to an approved consolidation or repayment
plans, and courts look primarily for voluntary payments. Wynn v. Educ. Credit Mgmt. Corp. (In re
Wynn), 378 B.R. 140, 150 (Bankr. S.D. Miss. 2007). Where the debtor has failed to make

payments, “[t]he ‘overarching inquiry’ is whether the payment delinquency ‘is the result of factors
beyond [the debtor’s] control.’” In re Little, 607 B.R. at 861; see also McMullin v. United States
Dep’t of Educ. (In re McMullin), 316 B.R. 70, 81 (Bankr. E.D. La. 2004) (stating that the debtor’s
good faith is “interpreted in light of his ability to pay”).
In this case, the Debtor did not demonstrate a good faith effort to repay the loans consistent
with the third prong of the Brunner test. A good faith effort most clearly manifests in actual
payments. Following the Debtor’s deferments and forbearances, she failed to make payments
toward her loan balance, even when she could have done so by lowering her expenses. Aside from
one isolated payment to a single lender in September 2014, the Debtor has shown no evidence of

voluntary payments on her loans. Nor has she demonstrated that her failure to pay resulted from
factors beyond her reasonable control.
The Debtor’s decision to move to Virginia had a detrimental effect on the Debtor’s
employment options, potential income, and cost of living. The Debtor is entitled to make decisions
premised on personal as well as financial considerations, even if those decisions ultimately hinder
her ability to pay off her debt, but the Court has made clear in Brunner and its successors that
knowingly lowering income and/or increasing expenses weighs against a finding of good faith.
Even within the constraints of her new living situation, the Debtor failed to show that she
minimized expenses, and further, that any funds saved through her financial decisions were put
toward her student loans.
The Debtor’s attempts to consolidate her loans were successful in part, but she failed to
make any payments following consolidation. While the Debtor exploring her options for a lower
monthly payment may contribute to a good faith finding, merely pursuing a consolidation or

repayment options does not absolve the Debtor of her responsibility to make actual payments under
that plan. Unlike in a forbearance or deferment, the Debtor agreed in her consolidation and
repayment plan communications to pay a determined amount on her debt. She did not pay
accordingly. The Debtor filed for bankruptcy shortly after these attempts, showing a short-lived
effort, if any, to follow through with the plan.
The Debtor has generally failed to maximize her income and minimize her expenses.
While the Debtor has taken several actions that indicate a desire to minimize payments due, these
actions do not constitute a good faith effort to make payments on the loans. What can be described
in this case as small steps in the right direction unfortunately do not reach the standard set by

Brunner as a good faith effort to pay. The Court therefore finds that the Debtor does not satisfy
the third prong of the Brunner test for undue hardship.
Conclusion
For the reasons stated above, the Court finds the Debtor has not satisfied her burden of
showing that repayment of her Student Loans would impose an undue hardship on her within the
meaning of section 523(a)(8) of the Bankruptcy Code. The Court will enter a separate judgment
denying the relief requested in the Amended Complaint.
### End of Findings and Conclusions ###

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10462364. Public record. Not legal advice.