Amicus Curiae Brief — Thelma G. McCoy, Petitioner v. United States

No. 20-886

IN THE

Supreme Court of the United States

_______________________________

THELMA G. MCCOY,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

_______________________________

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________________

BRIEF OF AMICI CURIAE CONSUMER

BANKRUPTCY AND STUDENT LOAN

ACADEMICS IN SUPPORT OF PETITIONER

_______________________________

Carter C. White

Counsel of Record

UC DAVIS CIVIL RIGHTS

CLINIC

One Shields Avenue,

Bldg. TB-30

Davis, CA 95616

(530) 752-5440

ccwhite@ucdavis.edu

Counsel for Amici Curiae

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................ ii

INTEREST OF AMICI ........................................ 1

SUMMARY OF ARGUMENT ............................. 1

ARGUMENT ........................................................ 3

I.

“Undue Hardship” Should Be

Interpreted in Light of the Purposes

of the Federal Student Loan

Program ..................................................... 3

II.

An Unduly Demanding

Interpretation of “Undue Hardship”

Undermines the Purposes of the

Federal Student Loan Programs .............. 5

A. Equality of Access to Higher

Education ............................................ 5

B. Educating the Population for the

Benefit of Society ................................ 8

C. Minimizing the Effect of Loans

on Career Choice .............................. 11

D. Benefiting Students ......................... 14

III.

The Brunner Test Misapplies “Undue

Hardship” Because It Is Based on an

Unsupported, Incorrect, and Incomplete

View of Statutory Purpose. ...................... 17

CONCLUSION .................................................. 20

APPENDIX

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Browne v. Duchesne,

60 U.S. (19 How.) 183 (1857) .......................... 4

In re Brunner,

46 B.R. 752 (S.D.N.Y. 1985) .......1, 2, 17, 18, 19

Brunner v. New York Higher Education Services

Corp.,

831 F.2d 395 (2d Cir. 1987) ........................... 17

Chae v. SLM Corp.,

593 F.3d 936 (9th Cir. 2010) ........................... 6

In re Gerhardt,

348 F.3d 89 (5th Cir. 2003) ..................... 12, 19

Grogan v. Garner,

498 U.S. 279 (1991) ....................................... 10

In re Hough,

128 Fed. Appx. 369 (5th Cir. 2005).................. 19

Kokoszka v. Belford,

417 U.S. 642 (1974) ......................................... 4

Local Loan Co. v. Hunt,

292 U.S. 234 (1934) ....................................... 10

iii

In re Mallinckrodt,

273 B.R. 560 (Bankr. S.D. Fla. 2002) ........... 13

In re Matthews-Hamad,

377 B.R. 415 (Bankr. M.D. Fla. 2007) .......... 12

In re McCoy,

810 Fed. Appx. 315 (5th Cir. 2020) ............... 19

In re Ostrom,

283 Fed. Appx. 283 (5th Cir. 2008) ............... 19

In re Oyler,

397 F.3d 382 (6th Cir. 2003) ......................... 12

Pelfrey v. Educ. Credit Mgmt. Corp.,

71 F. Supp. 2d 161 (N.D. Ala. 1999) ............... 6

Tetzlaff v. Educ. Credit Mgmt. Corp.,

794 F.3d 756 (7th Cir. 2015) ........................... 3

In re Thomas,

581 B.R. 482 (Bankr. N.D. Tex. 2017) .......... 19

In re Thomas,

931 F.3d 449 (5th Cir. 2019) ......................... 19

Statutes

11 U.S.C. § 523(a)(8) .................................................. 4

Education Amendments of 1976,

Pub. L. No. 94-482, § 127(a) ............................ 4

iv

National Defense Education Act,

Pub. L. 85-864, § 101, 72 Stat. 1580 (1958) .... 8

Other Authorities

139 Cong. Rec. 9423 (1993) ...................................... 14

153 Cong. Rec. 18,522 (2007). .................................... 9

153 Cong. Rec. 19,961 (2007) ..................................... 6

153 Cong. Rec. 23,864 (2007) ................................... 15

153 Cong. Rec. 23,873 (2007) ................................... 12

156 Cong. Rec. 4858 (2010) ...................................... 15

Am. Med. Ass’n, Reducing Medical Student Debt

Strengthens the Physician Workforce

(2015) ............................................................... 6

Abbye Atkinson, Race, Educational Loans, and

Bankruptcy,

16 Mich. J. Race & Law 1 (2010) .................. 16

Stephen Breyer, Making Our Democracy Work: A

Judge’s View 81 (2010) .................................... 3

Board of Governors of the Fed. Res. Sys., Consumer

Credit – Release G.19,

https://www.federalreserve.gov/releases/g19/cu

rrent/default.htm

(last visited Dec. 30, 2020) .............................. 4

v

Jesse Bricker & Jeffrey Thompson, Does Education

Loan Debt Influence Household Financial

Distress? An Assessment Using the 2007-2009

Survey of Consumer Finances Panel,

34 Contemp. Econ. Pol’y 660 (2016) ............. 17

Sonya L. Britt, Student Loans, Financial Stress, and

College Student Retention,

47 J. Student Fin. Aid 25 (2017) ..................... 7

Matthew Adam Bruckner, Higher Ed “Do Not

Resuscitate” Orders,

106 Ky. L.J. 223 (2018) ................................... 5

Claire Callender & Geoff Mason, Does Student Loan

Debt Deter Higher Education Participation?

New Evidence from England,

671 Annals Am. Acad. Pol. & Soc. Sci. 20 (2017)

.......................................................................... 7

Claire Callender & Jonathan Jackson, Does the Fear

of Debt Deter Students from Higher Education?,

34 J. Soc. Pol’y 509 (2005) ............................... 7

Congressional Budget Ofc., How the Supply of Labor

Responds to Changes in Fiscal Policy

(2012) ............................................................. 10

Rachel E. Dwyer et al., Debt and Graduation from

American Universities,

90 Soc. Forces 1133 (2012) .............................. 7

vi

Erica Field, Educational Debt Burden and Career

Choice: Evidence from a Financial Aid

Experiment at NYU Law School,

2009 Am. Econ. J. 1 (2006)............................ 13

Jonathan D. Glater, The Narrative and Rhetoric of

Student Loan Debt,

2018 Utah L. Rev. 885 ..................................... 5

Martha S. Grayson, Payback Time: The Associations

of Debt and Income with Medical Student

Career Choice,

46 Med. Educ. 983 (2012) .............................. 14

Higher Education Act of 1965: Hearings on H.R. 3220

and Similar Bills Before the Spec. Subcomm.

on Educ. & Lab.,

89th Cong. 29 (1965) ..................................... 14

H.R. Rep. No. 103-111 (1993) .................................. 11

John Patrick Hunt, Bankruptcy as Consumer

Protection: The Case of Student Loans,

52 Ariz. St. L.J. (forthcoming 2021)

(manuscript at 10-11),

https://papers.ssrn.com/sol3/papers.cfm?abstrac

t_id=3656532 ................................................. 18

John Patrick Hunt, Help or Hardship?: IncomeDriven Repayment in Student-Loan

Bankruptcies,

106 Geo. L.J. 1287 (2018) .............................. 20

vii

John Patrick Hunt, Tempering Bankruptcy

Nondischargeability to Promote the Purposes of

Student Loans,

72 SMU L. Rev. 725 (2019) .................... passim

Thomas H. Jackson, The Fresh-Start Policy in

Bankruptcy Law,

98 Harv. L. Rev. 1420 (1985) ........................ 10

Dalié Jiménez & Jonathan D. Glater, Student Debt Is

a Civil Rights Issue: The Case for Debt Relief

and Higher Education Reform,

55 Harv. C.R.-C.L. L. Rev. 131 (2020) .......... 16

Dalié Jiménez, Ending Perpetual Debts,

55 Hous. L. Rev. 609 (2018) ............................ 9

Adam J. Levitin, Bankrupt Politics and the Politics of

Bankruptcy,

79 Cornell L. Rev. 1399 (2012) ........................ 9

John F. Manning, The New Purposivism,

2011 Sup. Ct. Rev. 113 (2011) ......................... 3

Paying for a College Education: Barriers and

Solutions for Students and Families: Hearing

Before the Subcomm. on Higher Educ., Lifelong

Learning, and Competitiveness of the H. Comm.

on Educ. and Labor

110th Cong. 41 (2007) .................................... 11

Recorded Remarks on the Message on Education,

1 Pub. Papers 33 (Jan. 12, 1965) ................ 5, 8

viii

Thomas Richardson et al., The Relationship Between

Personal Unsecured Debt and Mental and

Physical Health: A Systematic Review and

Meta-Analysis,

33 Clinical Psychol. Rev. 1148 (2013) ........... 15

Jesse Rothstein & Cecilia Elena Rouse, Constrained

After College: Student Loans and Early-Career

Occupational Choices,

95 J. Pub. Econ. 149 (2011) ........................... 13

S. Rep. No. 89-673 (1965),

as reprinted in 1965 U.S.C.C.A.N. 4027 ......... 8

U.S. Dep’t of Educ., Federal Student Aid Portfolio

Summary,

https://studentaid.gov/datacenter/student/portfolio

(last visited Dec. 30, 2020) .............................. 4

Katrina M. Walsemann et al., Sick of Our Loans:

Student Borrowing and the Mental Health of

Young Adults in the United States,

124 Soc. Sci. & Med. 85 (2015) ...................... 16

1

INTEREST OF AMICI1

The amici curiae are academics with expertise

in student debt and consumer bankruptcy. They have

a professional interest in the correct application of the

undue-hardship standard applicable to bankruptcy

discharge of most student loans. Amici join this brief

solely on their own behalf and not as representatives

of their universities. A full list of amici appears in

Appendix A.

SUMMARY OF ARGUMENT

To interpret the open-ended phrase “undue

hardship,” courts must look not just to the goals of the

nondischargeability provision in isolation, but also to

the broader purposes of Title IV of the Higher Education Act (HEA), the statutory scheme governing federal student loans. Over 90 percent of outstanding

student loans were made under Title IV programs,

nondischargeability was originally adopted as an

amendment to the HEA, and the Brunner test itself

purports to be based on the “purposes of the guaranteed student loan program.” In re Brunner, 46 B.R.

752, 756 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir.

1987).

Overly stingy application of the undue-hardship provision undermines the expressly articulated

1 The parties have consented to the filing of this amicus

brief. No counsel for a party authored the brief in whole or in

part. No party, counsel for a party, or any person other than amicus curiae and their counsel made a monetary contribution intended to fund the preparation or submission of the brief.

2

overarching goals of the federal student loan programs. Fear of debt and student debt itself deter students, particularly low-income students, from

starting and completing higher education. Unmanageable debt discourages borrowers from using their

education for the economic benefit of society because

their earnings simply go to creditors. Fear of financial distress distorts students’ career choices. Many

student loans are harmful to borrowers, who would

have been better off never borrowing for higher education. By denying borrowers escape from debts they

cannot repay, nondischargeability exacerbates all

these effects, each of which undermines a goal of Title

IV.

The Brunner decision imagines a harsh “quid

pro quo” in which the federal government “exacts” a

price of near-total nondischargeability in exchange

for making student loans. Brunner, 46 B.R. at 756.

Although the Brunner opinion asserts that this

arrangement advances the purposes of the student

loan programs, it cites no evidence of the programs’

aims and ignores their true goals. The same is true of

the Fifth Circuit’s decisions adopting and applying

Brunner. These decisions are thus fundamentally

flawed.

To be sure, Congress did limit the

dischargeability of student loans, despite the tension

between nondischargeability and the goals of the

student loan programs. It thought doing so would

combat abuse and enhance repayment. But the limit

on dischargeability contains an “undue hardship”

exception of uncertain scope. In applying that

exception, courts should act not just to fight abuse and

3

recover money but also to advance the educationpromoting goals of the overall statutory scheme.

ARGUMENT

I.

“Undue Hardship” Should Be Interpreted in

Light of the Purposes of the Federal Student

Loan Program

The provision requiring “undue hardship” as a

prerequisite for bankruptcy discharge of student

loans is “open-ended.” Tetzlaff v. Educ. Credit Mgmt.

Corp., 794 F.3d 756, 759 (7th Cir. 2015). Thus,

reference to legislative purpose is critical.

See

Stephen Breyer, Making Our Democracy Work: A

Judge’s View 81 (2010) (“[J]udges faced with openended language and a difficult interpretive question

… rely heavily on purposes and related

consequences.”); John F. Manning, The New

Purposivism, 2011 Sup. Ct. Rev. 113, 173 (2011)

(“Certainly … when an interpreter makes sense of an

open-ended statute, it is appropriate if not necessary

to read such a statute in light of the broad purposes

that inspired its enactment.”). “Undue hardship”

therefore should be interpreted in light of the overall

purposes of the relevant statutory scheme. As this

Court held in an opinion interpreting the Bankruptcy

Act together with a related statute:

[T]he court … will take in connection

with [the specific clause at issue] the

whole statute (or statutes on the same

subject) and the objects and policy of the

law, as indicated by its various

provisions, and give to it such a

4

construction as will carry into execution

the will of the Legislature.

Kokoszka v. Belford, 417 U.S. 642, 650 (1974)

(quoting Brown v. Duchesne, 60 U.S. (19 How.)

183, 193 (1857)).

The “undue hardship” exception in Section

523(a)(8) of the Bankruptcy Code is inextricably

bound up with the student loan provisions of the

Higher Education Act (HEA). Federal student loan

programs under Title IV of the HEA account for

approximately 90 percent of the outstanding balance

of student loans in the United States.2 As discussed

in more detail in Part III, the Brunner test itself is

based on the perceived purposes of the federal

student

loan

programs.

Indeed,

the

nondischargeability provision first appeared not in

the Bankruptcy Code, but in the 1976 amendments

to the HEA. See Education Amendments of 1976,

2 As of the third quarter of 2020, the Department of Education reported an outstanding balance of $1,544.8 billion under

the three major Title IV programs: the Federal Direct Loan Program, the Federal Family Education Loan Program, and the Perkins Loan Program. U.S. Dep’t of Educ., Federal Student Aid

Portfolio Summary, https://studentaid.gov/data-center/student/portfolio (last visited Dec. 30, 2020). Also as of the third

quarter of 2020, the Federal Reserve reported a total outstanding balance of “student loans originated under the Federal Family Education Loan Program and the Direct Loan Program;

Perkins loans; and private student loans without government

guarantees” of $1,704.9 billion. Board of Governors of the Fed.

Res. Sys., Consumer Credit – Release G.19, https://www.federalreserve.gov/releases/g19/current/default.htm (last visited Dec.

30, 2020). Dividing $1,544.8 billion by $1,704.9 billion yields

90.61 percent.

5

Pub. L. No. 94-482, § 127(a), 90 Stat. 2081, 2141

(adding § 439A to Higher Education Act of 1965)

(repealed 1978). The undue-hardship provision of the

Bankruptcy Code cannot be properly understood in

isolation from the goals of Title IV of the HEA.

II. An Unduly Demanding Interpretation of

“Undue

Hardship”

Undermines

the

Purposes of the Federal Student Loan

Programs

Making bankruptcy discharge of educational

loans too difficult undermines the major purposes of

the student loan programs. Those purposes include

promoting equality of access to higher education, educating the population for the benefit of the country,

fostering freedom of career choice, and benefiting students. The argument in Part II is developed more

fully in John Patrick Hunt, Tempering Bankruptcy

Nondischargeability to Promote the Purposes of Student Loans, 72 SMU L. Rev. 725 (2019).

A. Equality of Access to Higher Education

Higher education access regardless of economic

circumstance is a primary goal of the student loan

programs, as scholars have often noted. See, e.g.,

Jonathan D. Glater, The Narrative and Rhetoric of

Student Loan Debt, 2018 Utah L. Rev. 885, 891;

Matthew Adam Bruckner, Higher Ed “Do Not

Resuscitate” Orders, 106 Ky. L.J. 223, 249 (2018). In

introducing the proposals that became the HEA,

President Johnson emphasized that “full educational

opportunity” was “our first national goal.” Recorded

Remarks on the Message on Education, 1 Pub. Papers

6

33 (Jan. 12, 1965) [hereinafter Message on

Education]. The legislative history of the HEA is full

of references to the goal of equality of educational

opportunity; members mentioned this goal at least 16

times in the floor debates on the bill. See Hunt,

Tempering, supra, at 732-34.

Equality of access remained important as

Congress modified the student loan programs over

the decades. For example, in support of the College

Cost Reduction and Access Act of 2007 (CCRAA),

Senator Mike Enzi stated, “Higher education is the

onramp to success in the global economy, and it is our

responsibility to make sure everyone can access that

opportunity and reach their goals.” 153 Cong. Rec.

19,961 (2007). Courts have recognized that the HEA

was adopted “to keep the college door open to all

students of ability, regardless of background.” E.g.,

Chae v. SLM Corp., 593 F.3d 936, 938 (9th Cir. 2010);

Pelfrey v. Educ. Credit Mgmt. Corp., 71 F. Supp. 2d

1161, 1162-63 (N.D. Ala. 1999).

The fear of student debt disproportionately

deters students from lower-income families from

pursuing higher education. The American Medical

Association, for example, has stated that the high

debt burden of medical school “may dissuade students

from attending medical school altogether, especially

students from diverse ethnic and socioeconomic

backgrounds.” Am. Med. Ass’n, Reducing Medical

Student Debt Strengthens the Physician Workforce

(2015).

7

Research bears out the contention that fear of

debt is especially likely to deter low-income students.

“Debt aversion,” defined as unwillingness to take out

student loans even when doing so would probably be

a good idea given the benefits of higher education, has

been found to affect 20 to 50 percent of student

borrowers and to be particularly likely to affect lowincome students. Hunt, Tempering, supra, at 743-44.

Researchers have also found that debt-averse

students, particularly those from families of lower

socioeconomic status, are less likely to plan on higher

education. See Claire Callender & Geoff Mason, Does

Student Loan Debt Deter Higher Education

Participation? New Evidence from England, 671

Annals Am. Acad. Pol. & Soc. Sci. 20, 36, 41, 46 n.16

(2017); Claire Callender & Jonathan Jackson, Does

the Fear of Debt Deter Students from Higher

Education?, 34 J. Soc. Pol’y 509, 509, 524 (2005).

Researchers have found direct links between

high debt and failure to complete an educational

program. Debt loads of more than $10,000 have been

found to be linked to lower graduation rates for

students at public universities, especially for students

from families in the bottom 75 percent of the income

distribution. Rachel E. Dwyer et al., Debt and

Graduation from American Universities, 90 Soc.

Forces 1133, 1146 fig.2, 1149 fig.3 (2012). Another

study found that students who dropped out of a large

public university in the Midwest “had taken out …

$2,000-$3,000 more in student loans during their first

two years of college” than students who had not

dropped out. Sonya L. Britt et al., Student Loans,

8

Financial Stress, and College Student Retention, 47 J.

Student Fin. Aid 25, 32 (2017).

Although researchers have not studied the

effects of student loan nondischargeability as

extensively as they have studied student debt in

general, nondischargeability makes high debt

balances more fearsome by denying the borrower the

recourse of bankruptcy. Because unmanageable

student debts and the fear of unmanageable student

debts

disproportionately

affect

lower-income

students, nondischargeability tends to undermine the

HEA’s goal of equal access to higher education.

B. Educating the Population

Benefit of Society

for

the

A second critical goal of the student loan

programs is educating the population for the benefit

of society. The earliest broad-based federal student

loan program was authorized in the 1958 National

Defense Education Act, which opened with the

finding that “the security of the Nation requires the

fullest development of the mental resources and

technical skills of its young men and women.”

National Defense Education Act, Pub. L. No. 85-864,

§ 101, 72 Stat. 1580, 1581 (1958). When he proposed

the HEA, with its expansion of federal student loan

programs, President Johnson emphasized that the

educational benefits the new law would bring about

were not just for the individual’s sake but “for the

country’s sake.” Message on Education, supra, at 33.

The legislative record of the HEA likewise reflects the

importance of this goal. See, e.g., S. Rep. No. 89-673

(1965), as reprinted in 1965 U.S.C.C.A.N. 4027, 4053

9

(citing the “continuing shortage of trained, educated

persons in many areas” and the “present and future

shortage of competent well-trained professional and

technical personnel” as reasons for Title IV); see also

Hunt, Tempering, supra, at 737 (citing additional

examples). Like the goal of equality of access, the

purpose of promoting education for the benefit of the

country remained important over the years. For

example, in 2007, Representative George Miller

described the CCRAA as an “investment” in “the

young people that will take their talents and provide

the next generation of discovery, … innovation, …

jobs , [and] economic activity.” 153 Cong. Rec. 18,522

(2007).

The research cited in Part II.A indicates that

the fear of unmanageable debt, and the presence of

high debt levels, are associated with not entering and

not completing educational programs.

Because

nondischargeability exacerbates the harm of

unmanageable debt, it undermines the goal of

educating the population, as well as the goal of equal

access to higher education.

Nondischargeability also interferes, through

“debt overhang,” with student debtors’ use of their

education to contribute to society. The idea of debt

overhang is simple: If the rewards of the debtor’s

activity go to creditors rather than the debtor, the

debtor may simply give up in despair on economic

activity and/or social participation. See, e.g., Dalié

Jiménez, Ending Perpetual Debts, 55 Hous. L. Rev.

609, 639 (2018); Adam J. Levitin, Bankrupt Politics

and the Politics of Bankruptcy, 97 Cornell L. Rev.

10

1399, 1435 (2012); Thomas H. Jackson, The FreshStart Policy in Bankruptcy Law, 98 Harv. L. Rev.

1393, 1420-24 (1985).

As this Court has recognized, solving the debtoverhang problem is a major goal of American

bankruptcy law, which has, as a “primary purpose[],”

“reliev[ing] the honest debtor from the weight of

oppressive indebtedness, and permit[ting] him to

start afresh” with “a new opportunity in life and a

clear field for future effort, unhampered by the

pressure and discouragement of pre-existing debt.”

Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).

After all, “there is little difference between not

earning at all and earning wholly for a creditor.” Id.

at 245. Although Hunt was decided under the 1898

Bankruptcy Act, the 1978 Bankruptcy Code and

subsequent bankruptcy laws reflect the same

principle, see Hunt, Tempering, supra, at 754-55, and

this Court has cited the above-quoted passage of Hunt

in interpreting those laws, see Grogan v. Garner, 498

U.S. 279, 286 (1991).

Research in the analogous field of tax indicates

that labor output goes down when tax rates go up. See

Congressional Budget Office., How the Supply of

Labor Responds to Changes in Fiscal Policy 4 tbl. 1

(2012) (reporting that a middle-of-the-road estimate

is that a tax increase of 10 percent of after-tax income

would reduce labor output by approximately three

percent).

Turning over income to creditors

presumably affects behavior similarly to turning

income over to the government. Thus, the CBO

research suggests that taking even 10 percent of

11

marginal income for debt service, as required under

the most generous income-driven repayment (IDR)

programs, renders debtors less willing to work.

Thus, nondischargeability of student loan debt

does not just directly reduce the amount of education

students or prospective students acquire, as argued in

Part II.A. It also interferes, through the debtoverhang effect, with debtors’ use of their education

to strengthen the nation’s economy and thus

undermines a second key goal of the federal student

loan programs.

C. Minimizing the Effect of Loans on

Career Choice

A third goal of the student loan programs is to

minimize the effect of repayment obligations on

students’ career choice. This goal has shown up most

clearly in Congress’s authorization of income-driven

repayment plans (IDR) and employment-based loan

forgiveness. For example, the committee report on

the House bill that led to enactment of the first largescale IDR plan identified one of the purposes of the

student loan reform as “provid[ing] [borrowers] a

variety of repayment plans, including [a]n incomecontingent repayment [plan] … so that …

[repayment] obligations do not foreclose community

service-oriented career choices.” H.R. Rep. No. 103111, at 119 (1993). In 2007, when Congress made

income-driven repayment more generous and enacted

forgiveness based on public-service employment, both

the House and Senate debates reflected a purpose to

make it easier for students to choose lower-paying but

valuable careers. See Paying for a College Education:

12

Barriers and Solutions for Students and Families:

Hearing before the Subcomm. on Higher Educ.,

Lifelong Learning, and Competitiveness of the H.

Comm. on Educ. and Labor, 110th Cong. 41 (2007)

(statement of Rep. Petri) (“[IDR] would also give

people the opportunity to do low-income work to

prepare for maybe more lucrative careers later.”); 153

Cong. Rec. 23,873 (2007) (statement of Sen. Murray)

(a “problem with high student loan debt” is that it

“limits the career choices of college graduates”).

Nondischargeability’s constraining effect on

career choice shows up directly in judicial decisions.

Frequently, student borrowers who have found

rewarding but low-paying work in fields for which

they were trained are denied bankruptcy relief on the

ground that they should abandon their jobs for more

lucrative employment elsewhere. For example, in In

re Gerhardt, 348 F.3d 89 (5th Cir. 2003), the debtor

was a professional cellist who was unable to maintain

a minimal standard of living on his cellist’s salary.

The court upheld denial of discharge, writing,

“nothing in the Bankruptcy Code suggests that a

debtor may choose to work only in the field in which

he was trained, obtain a low-paying job, and then

claim it would be an undue hardship to repay his

student loans.” Id. at 93. Other decisions are similar.

See, e.g., In re Oyler, 397 F.3d 382, 386 (6th Cir. 2003)

(trained minister who was pastor of start-up church

denied discharge; debtor was “obliged to seek work

that would allow debt repayment before he can claim

undue hardship”); In re Matthews-Hamad, 377 B.R.

415, 422 (Bankr. M.D. Fla. 2007) (Salvation Army

counselor denied discharge; “the fact that a debtor has

13

a low-paying job without much upside earning

potential is not enough”); In re Mallinckrodt, 274 B.R.

560, 568 (Bankr. S.D. Fla. 2002) (mental health

counselor who earned less than $6,000 per year

denied discharge; “no evidence” that he had “made

efforts to generate income outside his chosen

profession”).

More generally, the effect of student debt on

career choice is well-documented. Researchers who

studied a private college’s change in financial aid

policies to replace loans with grants found that “debt

causes graduates to choose substantially highersalary jobs and reduces the probability the students

choose low-paid ‘public interest’ jobs.”

Jesse

Rothstein & Cecilia Elena Rouse, Constrained After

College:

Student Loans and Early-Career

Occupational Choices, 95 J. Pub. Econ. 149, 149

(2011).

A study at the New York University School of

Law found that even calling assistance a “loan” affects

career choice. Two groups of students received

substantively identical financial aid offers that

provided that the student would not have to repay the

aid if the student worked in public interest law for a

period of time, but otherwise would have to repay.

One group’s offers were structured as loans and the

other group’s as conditional tuition subsidies. The

students who received tuition subsidies had a

significantly higher rate of placement in lower-paying

public interest jobs. Erica Field, Educational Debt

Burden and Career Choice:

Evidence from a

Financial Aid Experiment at NYU Law School, 2009

14

Am. Econ. J. 1, 1 (2006). A study of medical students

found that students with more debt were more likely

to switch in medical school from primary care to highpaying non-primary-care specialties.

Martha S.

Grayson et al., Payback Time: The Associations of

Debt and Income with Medical Student Career Choice,

46 Med. Educ. 983, 983 (2012).

Nondischargeability of student loan debt

makes it riskier to take on lower-paying employment,

as bankruptcy provides no escape if the student

borrower enters financial distress. Indeed, when

debtors do enter low-paying fields and encounter

distress, courts in effect tell them to abandon work for

which their education has prepared them so that they

can

pay

more

on

their

student

loans.

Nondischargeability thus exacerbates the effect of

debt on career selection.

D. Benefiting Students

Finally, student loan programs are supposed to

benefit students. See Hunt, Tempering, supra, at 74042.

For example, Secretary Celebrezze of the

Department of Health, Education, and Welfare

testified that Title IV of the HEA was designed “to

make the benefits of higher education available” more

broadly. Higher Education Act of 1965: Hearings on

H.R. 3220 and Similar Bills Before the Spec.

Subcomm. on Educ. of the H. Comm. on Educ. &

Labor, 89th Cong. 29 (1965). In 1993, Senator Paul

Simon predicted that direct lending would “help[]”

hundreds of thousands of students. 139 Cong. Rec.

9423 (1993). Senator Enzi’s 2007 description of

higher education as “the onramp to success in the

15

global economy,” 153 Cong. Rec. 23,864 (2007), and

Senator Mikulski’s reference in 2010 to “the freedom

to achieve” through higher education, 156 Cong. Rec.

4858 (2010), likewise painted rosy pictures of student

loans.

But some students are harmed, not helped, by

borrowing for higher education. Being indebted is

harmful. A meta-analysis of 65 studies with a pooled

sample size of almost 34,000 found that there is “a

statistically significant relationship between debt and

presence of a mental disorder, depression, suicide

completion or attempt, problem drinking, drug

dependence, neurotic disorders … and psychotic

disorders.”

Thomas Richardson et al., The

Relationship Between Personal Unsecured Debt and

Mental and Physical Health: A Systematic Review

and Meta-Analysis, 33 Clinical Psychol. Rev. 1148,

1153 (2013). Researchers have also linked negative

effects to student loans specifically. Student loans

have been found to be associated with lower postgraduation income (among students with bachelor’s

degrees, the population studied); lower self-reported

mental health; lower future net worth (with net worth

calculated excluding the student loans) and

satisfaction with personal finances; lower probability

of owning a house or car and of getting married; and

a higher risk of material hardship, health-care

hardship, and other financial difficulties. See Hunt,

Tempering, supra, at 759-60 (collecting studies).

The risk of harm from educational debt

appears to be distributed along racial lines. Black

students are more likely than White ones “to borrow,

16

to borrow larger amounts, to take out student loans to

attend for-profit schools with worse career outcomes,

and to default . . . .” Dalié Jiménez & Jonathan D.

Glater, Student Debt Is a Civil Rights Issue: The Case

for Debt Relief and Higher Education Reform, 55

Harv. C.R.-C.L. L. Rev. 131, 132-33 (2020). The

median Black borrower who started school in 2003-04

owed more in 2015 than was originally borrowed,

while the median White borrower owed less. See

Hunt, Tempering, supra, at 761. Moreover, higher

education appears to provide less security against

financial distress for Black people than for White

ones: bankrupt Black debtors are as likely as nonbankrupt ones to have a college degree, and the same

is not true for White debtors. See Abbye Atkinson,

Race, Educational Loans & Bankruptcy, 16 Mich. J.

Race & L. 1, 11-12 (2010). With more negative effects

and fewer positive effects from debt-funded

education, it seems likely that Black people are more

likely to suffer harm from student borrowing.

Of course, student loans may have positive

effects as well as negative ones because they may

make higher education possible.

But higher

education is a risky investment, even if it is on

average a good one. Studies have found that the

positive mental-health effect of having a four-year

degree does not shield borrowers from the negative

mental-health effects of student loans, see Katrina M.

Walsemann et al., Sick of Our Loans: Student

Borrowing and the Mental Health of Young Adults in

the United States, 124 Soc. Sci. & Med. 85, 89-90

(2015), and that student debt has a net positive

association with financial distress, even taking into

17

account education’s positive effects on financial wellbeing. See Jesse Bricker & Jeffrey Thompson, Does

Education Loan Debt Influence Household Financial

Distress? An Assessment Using the 2007–2009 Survey

of Consumer Finances Panel, 34 Contemp. Econ. Pol’y

660, 661 (2016). Students whose investment in

higher education has a relatively poor economic

outcome are often harmed and not helped by

borrowing for school, and nondischargeability

perpetuates the harm.

III. The Brunner Test Misapplies “Undue

Hardship” Because It Is Based on an

Unsupported, Incorrect, and Incomplete

View of Statutory Purpose

The Brunner test originated in a district-court

opinion of the Southern District of New York; the

Court of Appeals for the Second Circuit adopted the

test “[f]or the reasons set forth in the district court’s

order.” Brunner v. N.Y. State Higher Educ. Servs.

Corp., 831 F.2d 395, 396 (2d Cir. 1987). The district

court’s opinion therefore is the place to look to

understand the origins of the Brunner test.

The court did not, and could not, ground its test

primarily in the text or structure of the statute.

Indeed, the only textual claim it made is wrong. The

court stated that “[t]he existence of the adjective

‘undue’ indicates that Congress viewed gardenvariety hardship as insufficient . . . .” In re Brunner,

46 B.R. 752, 753 (S.D.N.Y. 1985). As dictionaries from

the time of enactment and re-enactment of the unduehardship provision in 1976 and 1978 confirm, the

most important relevant meaning of “undue” is

18

“excessive,” or “unjustifiably great,” not “unusually

great.” See John Patrick Hunt, Bankruptcy as

Consumer Protection: The Case of Student Loans, 52

Ariz. St. L.J. (forthcoming 2021) (manuscript at 1011),

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=

3656532. In other words, the issue is whether the

debtor’s hardship is too great as a normative matter,

not whether the hardship is greater than that of the

average bankrupt debtor. Courts are thus free to

determine that the average bankrupt debtor’s

suffering is unjustifiably great. Amici have found no

contemporary dictionary definition that supports the

contention that the use of “undue” necessarily implies

that the debtor’s suffering must be greater than

average or must exceed “garden variety hardship.”

See id.

The Brunner court’s “draconian” decision to

“strip[]” student debtors “of the refuge of bankruptcy

in all but extreme circumstances” rests largely on the

court’s own speculation about the “purposes” of the

federal student loan programs. Brunner, 46 B.R. at

756. Specifically, the court found that radically

restricting bankruptcy relief is a “quid pro quo” the

government “exacts” in return for making loans

available without regard to borrowers’ credit risk. Id.

Despite relying on the supposed purposes of the

student loan programs, Brunner cites no evidence

supporting its view of those purposes. Its failure to

do so cannot be chalked up to skepticism of legislative

history, as the decision relies extensively on the

legislative history of the nondischargeability

19

provision. Id. at 753-56 (“The statutory history has

provided the lodestone for most interpretations.”).

The Fifth Circuit likewise has ignored all

evidence of the goals of the student loan programs in

its decisions adopting and applying Brunner. See In

re McCoy, 810 Fed. Appx. 315 (5th Cir. 2020); In re

Thomas, 931 F.3d 449 (5th Cir. 2019); In re Ostrom,

283 Fed. Appx. 283 (5th Cir. 2008); In re Hough, 128

Fed. Appx. 369 (5th Cir. 2005); In re Gerhardt, 348

F.3d 89 (5th Cir. 2003). In its application of Brunner,

the Fifth Circuit has created perhaps the harshest

student loan bankruptcy regime in the country. Its

requirement that the debtor “specifically prove a total

incapacity in the future to pay her debts for reasons

not within her control,” McCoy, 810 Fed. Appx. at 317

(quoting Gerhardt, 348 F.3d at 92), is so demanding

that a bankruptcy judge in the circuit recently

observed that he had not discharged a single student

loan over a creditor’s objection in 15 years on the

bench. See In re Thomas, 581 B.R. 482, 482 (Bankr.

N.D. Tex. 2017).

The harsh quid pro quo that Brunner

envisioned, and that the Fifth Circuit has put into

effect, does not in fact serve the student loan

programs’ goals. Instead, as shown in Part II, overly

stingy bankruptcy relief discourages the pursuit of

higher education (particularly for people from lowerincome groups), distorts career choices, discourages

workers, and makes many student loans harmful

rather than helpful. All these effects undermine the

true aims of the student loan programs.

20

To be sure, Congress did restrict the

dischargeability of student loans in spite of

nondischargeability’s drawbacks. Members believed

that limiting dischargeability would combat

bankruptcy abuse and increase loan repayment. See

John Patrick Hunt, Help or Hardship?: IncomeDriven Repayment in Student-Loan Bankruptcies,

106 Geo. L.J. 1287, 1300-12 (2018). But Congress

restricted dischargeability by enacting an open-ended

standard, one that necessarily entails the exercise of

judicial discretion as to its scope. In exercising that

discretion, courts must balance the narrow,

discharge-disfavoring

goals

of

the

nondischargeability provision taken in isolation

against the discharge-favoring purposes of the rest of

the statutory scheme.

CONCLUSION

For the reasons stated above, the Court should

grant certiorari in this action so that it may, after full

briefing on the issue, resolve the split in the circuits

21

and settle for the entire nation what “undue hardship” means.

Respectfully submitted,

Carter C. White

Counsel of Record

UC DAVIS CIVIL RIGHTS

CLINIC

One Shields Avenue,

Bldg. TB-30

Davis, CA 95616

(530) 752-5440

ccwhite@ucdavis.edu

February 2, 2021

1a

APPENDIX A

Amici are listed below in alphabetical order. Their

institutional

affiliations

are

provided

for

identification purposes only.

Richard M. Alderman, Professor Emeritus. Director,

Center for Consumer Law University of Houston,

Law Center

Patrick B. Bauer, Professor of Law. University of

Iowa College of Law

Kara A. Bruce, Professor of Law. University of

Toledo College of Law

Matthew A. Bruckner, Associate Professor of Law.

Howard University School of Law

Laura N. Coordes, Associate Professor of Law.

Arizona State University Sandra Day O’Connor

College of Law

Susan L. DeJarnatt, Professor of Law. Temple

University Beasley School of Law

David Epstein, Professor of Law. University of

Richmond Law School

Eric M. Fink, Associate Professor of Law. Elon

University School of Law

Keith Fogg, Clinical Professor of Law. Harvard

Law School

2a

Judith Fox, Clinical Professor of Law. Notre Dame

Law School

Nicholas Georgakopoulos, H.R. Woodard Professor

of Law. Indiana University

Sara Goldrick-Rab, President & Founder, Hope

Center for College, Community, and Justice,

Professor of Sociology & Medicine. Temple

University

Susan Hauser, Professor of Law. North Carolina

Central University School of Law

Christoph Henkel, Professor of Law. Mississippi

College School of Law

Sarah Jane Hughes, University Scholar and Fellow

in Commercial Law. Maurer School of Law, Indiana

University

John Patrick Hunt, Professor of Law and Martin

Luther King, Jr. Research Scholar. University of

California, Davis School of Law (King Hall)

George W. Kuney, Lindsay Young Distinguished

Professor of Law and Director, Clayton Center for

Entrepreneurial Law. University of Tennessee,

Knoxville College of Law

Jonathan Lipson, Harold E. Kohn Professor of Law.

Temple University Beasley School of Law

3a

Stephen J. Lubben, Harvey Washington Wiley

Chair in Corporate Governance & Business Ethics.

Seton Hall University School of Law

Lois R. Lupica, Maine Law Foundation Professor of

Law, Emerita. University of Maine School of Law.

Visiting Professor of Practice, University of Denver

Sturm College of Law

Cathy Lesser Mansfield, Executive Director,

Master of Arts in Financial Integrity Program.

Senior Instructor in Law, Case Western University

School of Law

Peter V. Marchetti, Associate Professor of Law.

Thurgood Marshall School of Law - Texas Southern

University

Bruce A. Markell, Professor of Bankruptcy Law and

Practice, and Edward Avery Harriman Lecturer in

Law. Northwestern Pritzker School of Law

Nathalie Martin, Frederick M. Hart Chair in

Consumer and Clinical Law. University of New

Mexico School of Law

Patricia A. McCoy, Professor of Law. Boston

College Law School

Scott F. Norberg, Professor of Law. Florida

International University School of Law

Lawrence Ponoroff, Professor of Law, Michigan

State University College of Law

4a

Alexandra P. E. Sickler, Associate Professor.

University of North Dakota School of Law

Norman I. Silber, Professor of Law. Maurice A.

Deane School of Law Hofstra University

Laura Spitz, Professor of Law. University of New

Mexico School of Law

Timothy R. Tarvin, Professor of Law. University of

Arkansas School of Law

William T. Vukowich, Professor Emeritus of Law.

Georgetown University

Adrian J. Walters, Ralph I. Brill Professor of Law.

Chicago-Kent College of Law

Alan White, Professor. CUNY School of Law

Michaela White, Professor of Law. Creighton

School of Law