# Bankruptcy and Student Loans

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URL: https://www.frixlaw.com/law-library/documents/crs%3AR45113

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** July 18, 2019
- **Citation:** R45113

## Text

Bankruptcy and Student Loans
Kevin M. Lewis
Legislative Attorney
Updated July 18, 2019

Congressional Research Service
7-....
www.crs.gov
R45113

SUMMARY

Bankruptcy and Student Loans
As overall student loan indebtedness in the United States has increased over the years, many
borrowers have found themselves unable to repay their student loans. Ordinarily, declaring
bankruptcy is a means by which a debtor may discharge—that is, obtain relief from—debts he is
unable to repay. However, Congress, based upon its determination that allowing debtors to freely
discharge student loans in bankruptcy could threaten the student loan program, has limited the
circumstances in which a debtor may discharge a student loan. Under current law, a debtor may
not discharge a student loan unless repaying the student loan would impose an “undue hardship”
upon the debtor and his dependents.

R45113
July 18, 2019
Kevin M. Lewis
Legislative Attorney
-re-acte--@crs.loc.gov
For a copy of the full report,
please call 7-.... or visit
www.crs.gov.

The Bankruptcy Code does not define “undue hardship,” and the legislative history of the relevant statutory provision does
not precisely specify how courts should determine whether a debtor qualifies for an undue hardship discharge. The task of
interpreting this statutory term has consequently fallen to the federal judiciary. Courts, however, have disagreed regarding
exactly what a debtor must prove in order to discharge a student loan on undue hardship grounds.
The vast majority of courts have interpreted “undue hardship” to require the debtor to prove three things: (1) 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) additional circumstances exist indicating that the debtor’s inability to pay is likely to persist for
a significant portion of the repayment period of the student loans; and (3) the debtor has made good faith efforts to repay the
loans. The debtor must prove each of these elements by a preponderance of the evidence. This standard is commonly called
the “Brunner” test, after the case in which the standard originated. The Brunner test is highly fact-intensive, and not all courts
apply the Brunner standard the same way. Indeed, each factor has resulted in various subsidiary splits in the courts with
respect to a host of issues.
Whereas the vast majority of courts apply the Brunner test to determine whether excepting a student loan from discharge
would impose an undue hardship upon the debtor, two courts have explicitly declined to adopt the Brunner standard. Instead,
these courts apply an alternative standard known as “the totality-of-the-circumstances test,” weighing numerous,
nonexclusive factors when considering whether student loan debt should be discharged.
In response to this split of authority, as well as calls to make student loans less difficult to discharge in bankruptcy, some
Members of Congress and commentators have advanced various proposals to amend or repeal the Bankruptcy Code’s undue
hardship provision. These proposals implicate a variety of legal issues that Congress may consider.

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Contents
Introduction ..................................................................................................................................... 1
Background on Bankruptcy Law ..................................................................................................... 2
The Dischargeability Exception for Student Loans ......................................................................... 3
The “Undue Hardship” Exception ................................................................................................... 5
The Genesis and Evolution of Section 523(a)(8) ............................................................................ 5
The Enactment of the Bankruptcy Code ................................................................................... 6
Subsequent Amendments to Section 523(a)(8) ......................................................................... 8
Elimination of the Temporal Discharge Option .................................................................. 8
Expanding Section 523(a)(8) to Private Educational Loans ............................................... 9
Interpreting “Undue Hardship” ....................................................................................................... 9
The Brunner Test ..................................................................................................................... 10
The First Requirement: Inability to Maintain Minimal Standard of Living ......................11
The Second Requirement: Future Inability to Repay ........................................................ 17
The Third Requirement: Good Faith Efforts to Repay ..................................................... 25
The “Totality-of-the-Circumstances” Test .............................................................................. 28
The Eighth Circuit ............................................................................................................ 28
The First Circuit ................................................................................................................ 29
Comparing the Totality-of-the-Circumstances Test to Brunner .............................................. 30
Additional Doctrinal Considerations ....................................................................................... 31
Partial Discharge ............................................................................................................... 31
Income-Driven Repayment Plans ..................................................................................... 33
Administrative Discharge ................................................................................................. 37
Cosigner Liability for Student Loans ................................................................................ 37
Legal Issues Congress Could Consider ......................................................................................... 39
Modifying the “Undue Hardship” Standard ............................................................................ 39
Defining “Undue Hardship” in the Text of the Bankruptcy Code .................................... 39
Whether the Undue Hardship Standard Is Too Rigorous .................................................. 42
Updating the Undue Hardship Standard in Response to Changed Conditions ................. 42
Repealing Section 523(a)(8) ................................................................................................... 43
Amending the Bankruptcy Code to Make Private Education Loans Freely
Dischargeable ....................................................................................................................... 44
Reinstating the Temporal Discharge Option ........................................................................... 44
Procedural Changes to Obtaining an Undue Hardship Discharge........................................... 45
Other Potential Amendments to the U.S. Code ....................................................................... 47

Contacts
Author Contact Information .......................................................................................................... 47

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Introduction
The aggregate student loan debt owed by borrowers in the United States has increased markedly
over time. According to the U.S. Department of Education (ED), “[a]verage tuition prices have
more than doubled at U.S. colleges and universities over the past three decades, and over this
time period a growing proportion of students borrowed money to finance their postsecondary
education.”1 Per ED’s Federal Student Aid Data Center, the total amount of outstanding federal
student loan debt exceeded $1.4 trillion at the end of the first quarter of 2019.2
As overall student loan indebtedness has increased, many borrowers have found themselves
unable to repay their student loans. Statistics published by ED suggest that many borrowers face
an average educational debt burden that exceeds the “manageable percentage of income that a
borrower can” realistically “be expected to devote to loan payment” while still providing for the
basic needs of himself and his household.3
Declaring bankruptcy is one means by which an individual may potentially obtain relief from a
student loan that he cannot repay.4 However, for public policy reasons, the Bankruptcy Code5
limits the circumstances in which a debtor may discharge—that is, obtain relief from—a student
loan through the bankruptcy system. Unlike many other types of consumer debts, which are
generally freely dischargeable in bankruptcy,6 student loans are dischargeable only if the debtor
proves that repaying the debt “would impose an undue hardship on the debtor and the debtor’s
dependents.”7 By requiring the debtor to demonstrate an undue hardship in order to discharge a
student loan, Congress attempted to balance the goal of providing debtors in dire financial straits
with a “fresh start” against the countervailing goals “of preventing abuse of the student loan
program”8 and “protect[ing] student loan programs and their participants.”9 However, as this

1 Nat’l Ctr. for Educ. Statistics, Stats in Brief: Use of Private Loans by Postsecondary Students: Selected Years 2003-

04 Through 2011-12, U.S. DEP’T OF EDUC. 1 (2016), https://nces.ed.gov/pubs2017/2017420.pdf [hereinafter Private
Loans].
2 Fed. Student Aid, Federal Student Loan Portfolio, U.S. DEP’T OF EDUC., https://studentaid.ed.gov/sa/about/datacenter/student/portfolio (last visited June 16, 2019).
3 Nat’l Ctr. for Educ. Statistics, Stats in Brief: The Debt Burden of Bachelor’s Degree Recipients, U.S. DEP’T OF
EDUC.16 (2017), https://nces.ed.gov/pubs2017/2017436.pdf [hereinafter Debt Burden].
4 For a discussion of other means by which a debtor may potentially obtain relief from student loan debt, including
repayment plans, borrower repayment relief, loan discharge, and loan forgiveness, see CRS Report R40122, Federal
Student Loans Made Under the Federal Family Education Loan Program and the William D. Ford Federal Direct
Loan Program: Terms and Conditions for Borrowers, by David P. Smole, at 20-32, 34-38; and CRS Report R43571,
Federal Student Loan Forgiveness and Loan Repayment Programs, coordinated by Alexandra Hegji [hereinafter Hegji,
Forgiveness and Loan Repayment].
5 11 U.S.C. §§ 101-1532.
6 E.g., Daniel A. Austin, Student Loan Debt in Bankruptcy: An Empirical Assessment, 48 SUFFOLK U. L. REV. 577, 579
(2015) [hereinafter Austin, Student Loan Debt].
7 11 U.S.C. § 523(a)(8).
8 E.g., Cheesman v. Tenn. Student Assistance Corp. (In re Cheesman), 25 F.3d 356, 361 (6th Cir. 1994).
9 Hoffman v. Tex. Guaranteed Student Loan Corp. (In re Williams), Case No. 15-41814, Adv. No. 16-4006, 2017 WL
2303498, at *4 (Bankr. E.D. Tex. May 25, 2017). See also, e.g., De La Rosa v. Kelly (In re Kelly), 582 B.R. 905, 909
(Bankr. S.D. Tex. 2018) (“§ 523(a)(8) balances two competing policy objectives: (1) the debtor’s right to a fresh start;
and (2) the need to protect the financial integrity of educational loan programs and to induce lenders to lend to students
who cannot qualify for loans under traditional underwriting standards.”); Brown v. Rust (In re Rust), 510 B.R. 562, 566
(Bankr. E.D. Ky. 2014) (same).

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report explains, courts have reached divergent conclusions regarding exactly what an “undue
hardship” entails.
More broadly, some Members of Congress, courts, scholars, and other commentators have
debated whether to amend the Bankruptcy Code to change the way that student loans are treated
in bankruptcy in order to rebalance these competing policy objectives. Whereas some support the
law in its current form,10 there are presently several bills pending in the 116th Congress that, if
enacted, would modify the treatment of student loans in bankruptcy.11
This report provides a comprehensive overview of the various legal issues related to whether—
and under what circumstances—a debtor may discharge a student loan in bankruptcy. The report
begins by providing general background on bankruptcy law and the principles governing the
discharge of outstanding debt. In so doing, the report explains how and why the Bankruptcy Code
generally makes student loans nondischargeable absent an “undue hardship.” The report then
describes the various legal standards that courts have applied when determining whether a
particular debtor is entitled to an undue hardship discharge. The report closes by describing
various potential considerations for Congress, including ways in which Congress could alter the
Bankruptcy Code’s current treatment of student loans.

Background on Bankruptcy Law
Declaring bankruptcy is a means by which individuals may potentially obtain relief from debts
that they are unable to pay.12 According to the U.S. Supreme Court, one of the “central purposes”
of the bankruptcy system “is to provide a procedure by which certain insolvent debtors can
reorder their affairs, make peace with their creditors, and enjoy ‘a new opportunity in life with a
clear field for future effort, unhampered by the pressure and discouragement of preexisting
debt.’”13 The Bankruptcy Code implements this “fresh start” principle by “forgiv[ing] [the
debtor’s] existing debt” and “restor[ing] the debtor to economic productivity” in exchange for the
debtor giving up either a subset of his assets or a portion of his future income.14
An individual who satisfies the Bankruptcy Code’s eligibility requirements15 may attempt to
obtain bankruptcy relief by filing a document known as a bankruptcy “petition”16 in a federal
bankruptcy court—a specialized court authorized to resolve certain bankruptcy-related matters.17
10 See 124 CONG. REC. 1795 (1978) (statement of Rep. Michel) (contending that “restrictions on student bankruptcies”

are “logical”). Cf. Jason Iuliano, An Empirical Assessment of Student Loan Discharges and the Undue Hardship
Standard, 86 AM. BANKR. L.J. 495, 495 (2012) (rejecting arguments that the existing standard for discharging student
loans is “unduly burdensome”).
11 See infra “Legal Issues Congress Could Consider.”
12 See generally CRS Report R45137, Bankruptcy Basics: A Primer, by Kevin M. Lewis.
13 Grogan v. Garner, 498 U.S. 279, 286 (1991) (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)).
14 Rafael I. Pardo & Michelle R. Lacey, Undue Hardship in the Bankruptcy Courts: An Empirical Assessment of the
Discharge of Educational Debt, 74 U. CIN. L. REV. 405, 414 (2005) [hereinafter Pardo & Lacey, Empirical
Assessment]. Bankruptcy may impose other costs upon the debtor as well. See, e.g., Melissa B. Jacoby, Ripple or
Revolution? The Indeterminacy of Statutory Bankruptcy Reform, 79 AM. BANKR. L.J. 169, 186 (2005) (emphasizing
“the wide array of bankruptcy’s costs,” including “a large outlay for an attorney’s fee” and “an increase in the cost of
credit”).
15 See generally 11 U.S.C. § 109.
16 Id. § 301(a) (governing the commencement of a voluntary bankruptcy case).
17 See 28 U.S.C. § 157(b) (“Bankruptcy judges may hear and determine all cases under [the Bankruptcy Code] and all
core proceedings arising under [the Bankruptcy Code], or arising in a case under [the Bankruptcy Code] . . . .”).

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If the debtor complies with certain requirements of the Bankruptcy Code,18 the bankruptcy court
may grant the debtor a “discharge”—that is, relief from many of the debtor’s outstanding debts.19
“In essence, this discharge means that a debtor will no longer face responsibility for” many debts
that arose prior to the date upon which he filed bankruptcy, “even if the debtor has not repaid the
debt in full during the bankruptcy.”20

The Dischargeability Exception for Student Loans
Although many types of consumer debts are freely dischargeable in bankruptcy,21 Congress has
rendered certain debts categorically or presumptively nondischargeable for public policy
reasons.22 For example, whereas “medical debt is generally dischargeable in bankruptcy,”23 a debt
“for a domestic support obligation”24 or a debt “for death or personal injury” resulting from drunk
driving is generally nondischargeable.25
Under current law, student loans are among the types of debts that Congress has opted to make
presumptively nondischargeable in bankruptcy. Section 523(a)(8) of the Bankruptcy Code
provides that, absent an “undue hardship”—an exception that is discussed in more detail below—
a debtor who files bankruptcy may not discharge any debt for




“An educational benefit overpayment or 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”;26
“An obligation to repay funds received as an educational benefit, scholarship, or
stipend”;27 or

18 See, e.g., 11 U.S.C. § 521 (establishing duties a debtor must fulfill); id. § 727(a)(1)-(12) (enumerating circumstances

disentitling a debtor to a discharge); id. § 1322(a)(1) (requiring a Chapter 13 debtor to relinquish future income
pursuant to the terms of a plan to adjust the debtor’s debts).
19 See id. §§ 727, 1328, 1141(d). See generally Lewis, supra note 12, at 25-27 (describing the bankruptcy discharge in
greater detail).
20 Theresa J. Pulley Radwan, Determining Congressional Intent Regarding Dischargeability of Imputed Fraud Debts in
Bankruptcy, 54 MERCER L. REV. 987, 992 (2003) [hereinafter Radwan, Congressional Intent].
21 E.g., Austin, Student Loan Debt, supra note 6, at 579.
22 See In re Chambers, 348 F.3d 650, 653 (7th Cir. 2003) (“Congress has decided . . . that some public policy
considerations override the need to provide the debtor with a fresh start, and it has excluded certain debts from
discharge.”). See generally 11 U.S.C. § 523.
23 Abbye Atkinson, Consumer Bankruptcy, Nondischargeability, and Penal Debt, 70 VAND. L. REV. 917, 977 (2017)
[hereinafter Atkinson, Consumer Bankruptcy].
24 11 U.S.C. § 523(a)(5). See also id. § 101(14A) (defining “domestic support obligation”).
25 Id. § 523(a)(9).
26 Id. § 523(a)(8)(A)(i). To determine whether a loan or benefit is “educational” for the purposes of Section
523(a)(8)(A)(i), courts generally examine the purpose of the loan, not how the debtor used the loan’s proceeds. See
Busson-Sokolik v. Milwaukee Sch. of Eng’g (In re Busson-Sokolik), 635 F.3d 261, 266-67 (7th Cir. 2011); Page v. JP
Morgan Chase Bank (In re Page), 592 B.R. 334, 336 (B.A.P. 8th Cir. 2018); Jean-Baptiste v. Educ. Credit Mgmt. Corp.
(In re Jean-Baptiste), 584 B.R. 574, 585 (Bankr. E.D.N.Y. 2018). So, for instance, “rather than trying to determine
whether a computer purchased with loan money was used for schoolwork, personal use or some combination of both,”
courts instead inquire “whether the lender’s agreement with the borrower was predicated on the borrower being a
student who needed financial support to get through school.” See, e.g., Busson-Sokolik, 635 F.3d at 266. For analysis of
Section 523(a)(8)(A)(i)’s “funded in whole or in part by a governmental unit or nonprofit institution” language, see,
e.g., Page, 592 B.R. at 337-39 & nn.1-2; Wiley v. Wells Fargo Bank, N.A., 579 B.R. 1, 6-7 (Bankr. D. Me. 2017).
27 11 U.S.C. § 523(a)(8)(A)(ii). Notably, “the Bankruptcy Code does not define [the term] ‘educational benefit’” in
Section 523(a)(8)(A)(ii). E.g., Beesley v. Royal Bank of Can., Bankr. No. 12-24194-CMB, Adv. No. 12-2444-CMB,

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

“Any other educational loan that is a qualified education loan, as defined in [the
Internal Revenue Code], incurred by a debtor who is an individual.”28

For the sake of simplicity, this report refers to all three of these types of debts as “student
loans.”29
2013 WL 5134404, at *4 (Bankr. W.D. Pa. Sept. 13, 2013). Perhaps for that reason, courts have disagreed regarding
which types of obligations qualify as presumptively nondischargeable under 11 U.S.C. § 523(a)(8)(A)(ii). See, e.g.,
McDaniel v. Navient Solutions, LLC (In re McDaniel), 590 B.R. 537, 546 (Bankr. D. Colo. 2018) (“Courts in other
jurisdictions are divided . . . with some courts holding private loans that provide an educational benefit to the borrower
fall within Section 523(a)(8)(A)(ii) . . . and other courts embracing a much narrower view, holding such educational
loans are not included within this particular subsection . . . .”). The modern trend is to interpret Section 523(a)(8)(A)(ii)
narrowly to exclude loans from the subsection’s coverage. See McDaniel, 590 B.R. at 547, 549 (adopting the “trending
narrower view of Section 523(a)(8)(A)(ii)” and concluding that “‘an obligation to repay funds received as an
educational benefit, scholarship, or stipend’ does not include a loan”). See also Homaidan v. SLM Corp. (In re
Homaidan), 596 B.R. 86, 106 (Bankr. E.D.N.Y. 2019) (“The Court concludes that, in substance, an ‘obligation to repay
funds received as an educational benefit’ refers to the wide range of benefits that aid a student in meeting the costs of
his or her education, often with conditions and prospective obligations attached. But it does not include all debt that
confers the benefits of an education on the borrower.”).
28 11 U.S.C. § 523(a)(8)(B). See also, e.g., Wiley, 579 B.R. at 9-13 (analyzing Section 523(a)(8)(B)’s coverage).
29 As the preceding footnotes reflect, however, generically using the term “student loan” to describe the three categories
of obligations covered by Section 523(a)(8) is in certain respects both overinclusive and underinclusive. For instance,
to the extent that some—albeit not all—courts have concluded that Section 523(a)(8) does not cover certain types of
loans incurred for educational purposes (such as bar exam loans), it may be overly broad to state that Section 523(a)(8)
renders “student loans” presumptively nondischargeable. See Campbell v. Citibank, N.A. (In re Campbell), 547 B.R.
49, 52 (Bankr. E.D.N.Y. 2016) (“Because the Bar Loan is not an ‘educational benefit’ within the meaning of §
523(a)(8)(A)(ii), and is not encompassed in any other exception to discharge set forth in § 523(a)(8), the Bar Loan is
dischargeable . . . .”). But see Brown v. CitiBank, N.A. (In re Brown), 539 B.R. 853, 860 (Bankr. S.D. Cal. 2015)
(“[T]he court holds that the subject bar study loan is an education loan for § 523(a)(8) purposes, and thus not
dischargeable in bankruptcy absent a showing of undue hardship.”); Skipworth v. Citibank Student Loan Corp. (In re
Skipworth), Bankr. No. 09-83982-JAC-7, Adv. No. 09-80149-JAC-7, 2010 WL 1417964, at *2 (Bankr. N.D. Ala. Apr.
1, 2010) (“[T]he debtor’s obligation to Citibank is clearly ‘an obligation to repay funds received as an educational
benefit’ for purposes of § 523(a)(8)(A)(ii) in that Citibank loaned funds to the debtor to assist the debtor with his
educational expenses[,] i.e. the debtor’s bar review course.”).
At the same time, stating that Section 523(a)(8) covers “student loans” is in some respects overly narrow, as Section
523(a)(8) explicitly applies to certain types of obligations that do not qualify as “loans,” such as “obligation[s] to repay
funds received as [a] . . . scholarship.” See 11 U.S.C. § 523(a)(8)(A)(ii). See also, e.g., Wiley, 579 B.R. at 9 (concluding
that “Congress . . . envisioned section 523(a)(8)(A)(ii) capturing ‘obligations other than those arising from traditional
student loans’”) (quoting Inst. of Imaginal Studies v. Christoff (In re Christoff), 527 B.R. 624, 634 n.9 (B.A.P. 9th Cir.
2015)).
In many cases in which a bankrupt debtor desires to discharge an education-related debt, none of the parties dispute that
the debt in question qualifies as presumptively nondischargeable under Section 523(a)(8). See, e.g., Augustin v. U.S.
Dep’t of Educ. (In re Augustin), 588 B.R. 141, 147 (Bankr. D. Md. 2018) (“Here, there is no dispute that Mr.
Augustin’s student loans are within the scope of § 523(a)(8)(A)(i). Thus, his student loans are not subject to discharge
unless they impose an undue hardship on him and his dependents.”). In other cases, however, the debtor contests—and
the court must accordingly decide—whether the debt at issue falls within one or more of the three subcategories set
forth in Section 523(a)(8). See, e.g., Carow v. Chase Student Loan Serv. (In re Carow), Bankr. No. 10-30264, Adv. No.
10-7011, 2011 WL 802847, at *1-5 (Bankr. D.N.D. Mar. 2, 2011); Roy v. Sallie Mae, Bankr. No. 08-33318, Adv. No.
09-1406, 2010 WL 1523996, at *1 (Bankr. D.N.J. Apr. 15, 2010). For extensive analysis of the types of debts that are
covered (or not covered) by Section 523(a)(8), see Doug Rendleman & Scott Weingart, Collection of Student Loans: A
Critical Examination, 20 WASH. & LEE J. CIVIL RTS & SOC. JUST. 215, 272-276 (2014); 4 COLLIER ON BANKRUPTCY ¶
523.14[2] (16th ed. 2017).
Finally, certain types of educational loans may be governed by dischargeability standards other than those set forth in
Section 523(a)(8). See 42 U.S.C. § 292f(g) (providing that a Health Education Assistance Loan “may be released by a
discharge in bankruptcy” only if three prerequisites are met, none of which explicitly require the debtor to show an
undue hardship). See also Woody v. U.S. Dep’t of Justice (In re Woody), 494 F.3d 939, 945-46 (10th Cir. 2007)
(describing the differences between 11 U.S.C. § 523(a)(8) and 42 U.S.C. § 292f(g)). The details of those alternative

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As the Supreme Court has explained, Section 523(a)(8) is “self-executing”; the discharge that a
debtor generally receives at the conclusion of his bankruptcy case will usually “not include a
student loan debt” unless “the debtor affirmatively secures a hardship determination” in the
manner described in the following section of this report.30 Thus, in many bankruptcy cases,
student loans “pass through the bankruptcy process unaffected,”31 such that the debtor will
“emerge from bankruptcy with the continued obligation to repay his or her student loans.”32

The “Undue Hardship” Exception
Even though Section 523(a)(8) renders student loans presumptively nondischargeable, however, it
does not render them completely nondischargeable. Section 523(a)(8) as currently written allows
a debtor to discharge a student loan if “excepting such debt from discharge . . . would impose an
undue hardship on the debtor and the debtor’s dependents.”33 In order to discharge a student loan
on undue hardship grounds, the debtor must ordinarily file a separate complaint against the
creditor holding the student loan debt.34 The debtor must then prove by a preponderance of the
evidence that repaying the student loan would impose an undue hardship on him.35

The Genesis and Evolution of Section 523(a)(8)
Student loan debt has not always been presumptively nondischargeable in bankruptcy; for many
years, student loans were ordinarily dischargeable to the same extent as other forms of consumer
debt.36 Starting in the 1970s, however, Congress enacted a series of statutes that made it
progressively more difficult for debtors to discharge student loans.37 In order to explain the
standards are beyond the scope of this report.
30 Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440, 450 (2004).
31 Ekenasi v. Educ. Res. Inst. (In re Ekenasi), 325 F.3d 541, 545 (4th Cir. 2003).
32 Hicks v. Educ. Credit Mgmt. Corp. (In re Hicks), 331 B.R. 18, 22 (Bankr. D. Mass. 2005). See also Iuliano, supra
note 10, at 525.
33 11 U.S.C. § 523(a)(8).
34 See Easterling v. Collecto, Inc., 692 F.3d 229, 232 (2d Cir. 2012) (“To seek an undue hardship discharge of student
loans, a debtor must ‘commence an adversary proceeding by serving a summons and complaint on affected creditors.’”)
(quoting United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 269 (2010)); In re Quinn, 586 B.R. 1, 3 (Bankr.
E.D. Mich. 2018) (“If a debtor does not affirmatively secure an undue hardship determination, the discharge order will
not include a student loan debt.”). See also FED. R. BANKR. P. 4007(a), 7001(6) (“A debtor . . . may file a complaint to
obtain a determination of the dischargeability of any debt.”). Although there are limited circumstances in which a
debtor may discharge a student loan in bankruptcy without filing a separate lawsuit, they are complex and beyond the
scope of this report. See Espinosa, 559 U.S. at 263-79.
35 “The creditor bears the initial burden of proving the debt exists and that the debt is of the type excepted from
discharge under § 523(a)(8).” Educ. Credit Mgmt. Corp. v. Savage (In re Savage), 311 B.R. 835, 839 (B.A.P. 1st Cir.
2004). See also, e.g., Ivory v. United States (In re Ivory), 269 B.R. 890, 893 (Bankr. N.D. Ala. 2001); Raymond v.
N.W. Educ. Loan Ass’n (In re Raymond), 169 B.R. 67, 69 (Bankr. W.D. Wash. 1994). If the creditor meets that
burden, the burden then shifts to the debtor to prove an undue hardship by a preponderance of the evidence. E.g.,
Savage, 311 B.R. at 839; Ivory, 269 B.R. at 893; Raymond, 169 B.R. at 69.
The undue hardship requirement applies equally to consumer bankruptcy cases filed under Chapter 13 of the
Bankruptcy Code, liquidation cases under Chapter 7, and reorganization cases filed by individual consumers under
Chapter 11. E.g., In re Maura, 491 B.R. 493, 513 n.33 (Bankr. E.D. Mich. 2013); 11 U.S.C. §§ 523(a)(8), 1141(d)(2),
1328(a)(2).
36 E.g., Pappas v. Tex. Higher Educ. Coordinating Bd. (In re Pappas), 517 B.R. 708, 716 (Bankr. W.D. Tex. 2014),
aff’d, Corletta v. Tex. Higher Educ. Coordinating Bd., 531 B.R. 647 (W.D. Tex. 2015).
37 See, e.g., John Patrick Hunt, Help or Hardship? Income-Driven Repayment in Student-Loan Bankruptcies, 106 GEO.

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“undue hardship” standard, the policies underlying it, and potential ways in which Congress
could alter the way student loans are currently treated in bankruptcy, this report first addresses
why Congress enacted Section 523(a)(8) and how Congress has amended Section 523(a)(8) over
time.

The Enactment of the Bankruptcy Code
The Bankruptcy Reform Act of 1978—which created the modern Bankruptcy Code that remains
in effect in modified form today38—contained the first version of Section 523(a)(8).39 Like the
current version of Section 523(a)(8), the 1978 version rendered student loans presumptively
nondischargeable in bankruptcy.40
Section 523(a)(8)’s sponsors offered several policy justifications for making student loans
presumptively nondischargeable in bankruptcy. First, several Members cited the country’s interest
in “keep[ing] our student loan programs intact” as a justification for making student loans
presumptively nondischargeable.41 When a debtor defaults on a federal student loan, the taxpayers
are the ones who must generally foot the bill.42 The Bankruptcy Reform Act of 1978 therefore
reflected the view that allowing debtors to easily discharge student loans would adversely impact
the public fisc and thereby prevent future students from obtaining federal student loans of their
own.43 Section 523(a)(8)’s supporters in Congress therefore argued that, “if the student loan
program is to remain viable,” it was necessary to make student loans presumptively
nondischargeable so that, in the words of one Member, “we insure our youngsters in the future
that loan money will be available to them as it was to past generations.”44
Second, Section 523(a)(8)’s supporters sought to address the concern “that student borrowers will
abuse student loan programs by filing bankruptcy” immediately “after graduation, getting a
discharge, and then enjoying a lifetime of income that education provides, but without the
L.J. 1287, 1300-12 (2018) (tracing the development of Section 523(a)(8)).
38 E.g., Peter A. Alces, The Efficacy of Guaranty Contracts in Sophisticated Commercial Transactions, 61 N.C. L. REV.
655, 676 & n.142 (1983).
39 P.L. 95-598, § 523(a)(8), 92 Stat. 2549 (1978). Congress derived Section 523(a)(8) from a 1973 recommendation
made by the Commission on the Bankruptcy Laws of the United States. See H.R. DOC. NO. 93-137, at 11-12 (1973)
(“The Commission recommends that . . . an educational loan not be dischargeable in any bankruptcy case commenced
within five years after the first installment becomes due, absent unusual circumstances.”). Congress also briefly
experimented with making student loans nondischargeable in bankruptcy during the few years immediately preceding
the Bankruptcy Code’s enactment. For further information regarding precursors to Section 523(a)(8), see Education
Amendments of 1976, P.L. 94-482, § 439(a), 90 Stat. 2081 (1976); Bd. of Regents of Univ. Sys. of State of Ga. v.
Williamson (In re Williamson), 665 F.2d 683, 684-685 (5th Cir. 1982); N.Y. State Higher Educ. Servs. Corp. v. Adamo
(In re Adamo), 619 F.2d 216, 218-222 (2d Cir. 1980).
40 P.L. 95-598, § 523(a)(8), 92 Stat. 2549 (1978).
41 124 CONG. REC. 1791 (1978) (statement of Rep. Ertel).
42 See, e.g., id. at 1793 (statement of Rep. Erlenborn) (“Because of our interest in seeing that young people have an
opportunity to obtain an education, we have made loans available to them by extending the credit of the United States
to guarantee that [student] loan[s] will be repaid.”).
43 See, e.g., id. at 1792 (statement of Rep. Ertel) (“Without this amendment, we are discriminating against future
students, because there will be no funds available to them to get an education . . . It is to keep the student loan program
going, and to keep it viable.”); id. at 1794 (statement of Rep. Erlenborn) (“Students who are really in need are not
going to be able to get the loans that they need.”).
44 Id. at 1792 (statement of Rep. Mottl). See also id. (statement of Rep. Ertel) (“Without this amendment, we are
discriminating against future students, because there will be no funds available to them to get an education . . . It is to
keep the student loan program going, and to keep it viable.”); id. at 1794 (statement of Rep. Erlenborn) (“Students who
are really in need are not going to be able to get the loans that they need.”).

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expense of paying back the loans.”45 “When a student borrower graduates, the accumulated
student debt almost always dwarfs the student’s tangible assets” that could be distributed to
creditors in bankruptcy.46 However, the debtor “will presumably use her loan-funded education to
substantially increase her income in the near future.”47 Put another way, although a recent
graduate will likely be unable to immediately repay his student loans right after completing his
degree, he will hopefully reap economic benefits from his education that will allow him to repay
the debt over the long term. If, however, a student could freely discharge her loans immediately
after graduation, a recent graduate could thereby obtain “debt relief at the point in time when her
realizable assets and present income are at their lowest and her debt and future income are at their
highest.”48 At least one of the Members who supported Section 523(a)(8) therefore believed that
declaring bankruptcy immediately after graduation—and thereby “making the taxpayers pick up
the tab” for the debtor’s student loans—would be “tantamount to fraud.”49 Congress therefore
intended Section 523(a)(8) to “prevent[] debtors from easily discharging their debts at the
expense of the taxpayers who made possible their education.”50
Third, several Members who supported Section 523(a)(8) also emphasized that, in contrast to
many other forms of consumer debt, a creditor cannot “repossess” the subject of the loan if the
debtor defaults.51 That is, whereas a debt collector may repossess and resell a house if a
homeowner fails to pay his mortgage, a creditor cannot remove a college education from a
graduate’s brain, nor can an auctioneer sell a defaulting debtor’s degree on the open market.52

45 Daniel A. Austin, The Indentured Generation: Bankruptcy and Student Loan Debt, 53 SANTA CLARA L. REV. 329,

369 (2013) [hereinafter Austin, Indentured Generation]. See also supra note 44.
46 Mathews v. Higher Educ. Assistance Found. (In re Mathews), 166 B.R. 940, 943 (Bankr. D. Kan. 1994). See also
124 CONG. REC. 1793-1794 (1978) (statement of Rep. Erlenborn) (noting that the average student loan debtor “does not
have assets and would not, in the ordinary course of events, be able to obtain credit”).
47 Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 446 F.3d 938, 944 (9th Cir. 2006). See also 124 CONG. REC. 17931794 (1978) (statement of Rep. Erlenborn) (“The student on his part, not having assets to pledge, is pledging his future
earning power.”).
48 See John A. E. Pottow, The Nondischargeability of Student Loans in Personal Bankruptcy Proceedings: The Search
for a Theory, 44 CAN. BUS. L.J. 245, 253 (2006).
49 124 CONG. REC. 1793-1794 (1978) (statement of Rep. Erlenborn).
50 Spence v. Educ. Credit Mgmt. Corp. (In re Spence), 541 F.3d 538, 545 (4th Cir. 2008). See also, e.g., 124 CONG.
REC. 1793-1794 (1978) (statement of Rep. Erlenborn) (“The student has pledged his future earning power for the
payment of a debt that has been guaranteed by the United States and then, rather than using that earning power to
discharge the debt, as he has promised, he seeks, through bankruptcy, to be discharged of the debt, thereby making the
taxpayers pay it for him.”).
51 124 CONG. REC. 1792 (1978) (statement of Rep. Ertel) (“Some people have said, ‘Why should student loans be
treated any differently than any other loans?’ Well, I would suggest that when one gets a business loan, one has
collateral or something to justify that loan. But, on student loans the only thing one can put up for collateral is the
ability he will have to make a better living after he has gotten that education. And so, what we have is an unsecured
loan granted to students to get a better education.”); id. (statement of Rep. Erlenborn) (“The student is not like the
average debtor. The average debtor has credit extended to him because he has assets. He pledges those assets . . . to the
payment of the debt. The student does not have assets.”).
52 Jean Braucher, Mortgaging Human Capital: Federally Funded Subprime Higher Education, 69 WASH. & LEE L.
REV. 439, 475 (2012) (“A college education is different [than a home] in that it cannot be surrendered.”); Julie
Swedback & Kelly Prettner, Discharge or No Discharge? An Overview of Eighth Circuit Jurisprudence in Student
Loan Discharge Cases, 36 WM. MITCHELL L. REV. 1679, 1683 n.16 (2010) (“The creditor cannot seize a borrower’s
education in the event of a default.”); Pottow, supra note 48, at 255 (“It is difficult to divest the debtor of an
educational benefit ex post. Liquidation of an M.D. degree would be an unruly affair, and few if any jurisdictions allow
licenses to practice medicine to be assignable.”).

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Members who supported Section 523(a)(8) therefore argued that these distinctions from other
forms of consumer debt supported treating student loans differently in bankruptcy.53

Subsequent Amendments to Section 523(a)(8)
Congress has periodically amended Section 523(a)(8) since 1978.54 Each of these amendments
has made it more difficult for debtors to discharge student loans in bankruptcy.55 Two of these
amendments are particularly important.

Elimination of the Temporal Discharge Option
In its original form, Section 523(a)(8) gave debtors two separate options for discharging student
loans: the debtor could either (1) demonstrate an undue hardship or (2) prove that the loan first
became due56 at least five years before the debtor filed for bankruptcy.57 Thus, if a debtor’s
student loan was more than five years old, he could potentially discharge that loan in bankruptcy
without proving an undue hardship.58
In 1990, Congress extended the five-year period to seven years.59 Thus, between 1990 and 1998,
a “debtor seeking to discharge her educational loans in bankruptcy had to wait until seven years
after those loans first became due to file if he hoped to discharge those loans without proving that
their repayment constituted an undue hardship.”60
Then, in 1998, Congress entirely eliminated this “temporal discharge” option—that is, the option
for debtors to discharge student loans without demonstrating an undue hardship if the loans first
became due a sufficient number of years before the debtor filed bankruptcy—when enacting the
Higher Education Amendments of 1998 (Amendments).61 The legislative history of the
Amendments states that Congress “eliminat[ed] the current bankruptcy discharge for student
borrowers after they have been in repayment for seven years” in an “effort to ensure the budget

53 See supra note 51.
54 P.L. 96-56, 93 Stat. 387 (1979); Bankruptcy Amendments and Federal Judgeship Act of 1984, P.L. 98-353, § 454(a),

98 Stat. 333 (1984); Omnibus Budget Reconciliation Act of 1990, P.L. 101-508, § 3007, 104 Stat. 1388 (1990); Crime
Control Act of 1990, P.L. 101-647, § 3621(1)-(2), 104 Stat. 4789 (1990); Higher Education Amendments of 1998, P.L.
105-244, § 971(a), 112 Stat. 1581 (1998); Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, P.L.
109-8, § 220, 119 Stat. 23 (2005).
55 E.g., Swedback & Prettner, supra note 52, at 1681 (“Over the last three decades, Congress has increasingly narrowed
the bases on which debtors may discharge their loans in bankruptcy.”).
56 Many (but not all) courts interpreted the phrase “first became due” to mean the date on which the borrower’s first
installment payment came due. See, e.g., Nunn v. Washington (In re Nunn), 788 F.2d 617, 618 (9th Cir. 1986) (“Nunn
argues that her loan ‘first became due’ when the first installment was due . . . The vast majority of courts that have
considered the issue have adopted the interpretation of section 523(a)(8)(A) which Nunn advocates. We find that
interpretation to be consistent with the language and the legislative history of the statute.”).
57 P.L. 95-598, § 523(a)(8), 92 Stat. 2549 (1978).
58 Braucher, supra note 52, at 473.
59 Crime Control Act of 1990, P.L. 101-647, § 3621(2), 104 Stat. 4789 (1990).
60 Abbye Atkinson, Race, Educational Loans, & Bankruptcy, 16 MICH. J. RACE & L. 1, 36 (2010) [hereinafter Atkinson,
Race].
61 Higher Education Amendments of 1998, P.L. 105-244, § 971(a), 112 Stat. 1581 (1998).

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neutrality of” the Amendments.62 As a result, demonstrating an undue hardship is presently the
only way a debtor may discharge a student loan in bankruptcy.63

Expanding Section 523(a)(8) to Private Educational Loans
Although most borrowers fund their education using federal student loans, “education loans are
also available from such private sources as banks [and] credit unions.”64 Whereas discharging a
federal student loan will shift the cost of the debtor’s default to American taxpayers,65
commentators have noted that taxpayers are not directly “footing the bill for private loan
defaults.”66
As originally enacted, Section 523(a)(8) did not cover private loans; whereas federal student
loans were presumptively nondischargeable in bankruptcy, private educational loans were
generally freely dischargeable like many other forms of consumer debt.67 In 2005, however,
Congress “changed the definition of student loans covered under § 523(a)(8) to include private
loans, thus making any student loan, federal or not, essentially non-dischargeable in bankruptcy”
absent a showing of undue hardship.68 Members who supported this amendment argued that it
would “ensure that the [bankruptcy] system is fair for both debtors and creditors” and “eliminate
abuse in the system.”69 Thus, with limited exceptions,70 private education loans are now equally
subject to the undue hardship requirement.71

Interpreting “Undue Hardship”
The Bankruptcy Code does not define “undue hardship,”72 and the legislative history of Section
523 does not precisely specify how courts should determine whether a debtor qualifies for an
undue hardship discharge.73 The task of interpreting this statutory term has consequently fallen to
62 H.R. Rep. No. 105-750, at 408 (1998).
63 11 U.S.C. § 523(a)(8); Kevin J. Smith, The Income-Based Repayment Plans and For-Profit Education: How Does

This Combination Affect the Question to Include Student Loans in Bankruptcy?, 32 GA. ST. U. L. REV. 603, 642 (2016);
Atkinson, Race, supra note 60, at 36; Swedback & Prettner, supra note 52, at 1681 n.9.
64 Private Loans, supra note 1, at 1-2.
65 E.g., In re Engen, 561 B.R. 523, 546 (Bankr. D. Kan. 2016); Campton v. U.S. Dep’t of Educ. (In re Campton), 405
B.R. 887, 892 (Bankr. N.D. Ohio 2009).
66 Iuliano, supra note 10, at 524 n.92.
67 E.g., Braucher, supra note 52, at 473-74.
68 Smith, supra note 63, at 642. See also Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, P.L. 1098, § 220, 119 Stat. 23 (2005); Braucher, supra note 52, at 473; Swedback & Prettner, supra note 52, at 1681 n.9
(“Under this amendment, non-federally backed loans enjoy[] the presumption of non-dischargeability under the
bankruptcy code.”).
69 H.Rept. 109-31, at 2 (2005).
70 See Rendleman & Weingart, supra note 29, at 274-75 (describing limited circumstances in which “a private loan may
be dischargeable”).
71 Iuliano, supra note 10, at 524 n.92. See also, e.g., De La Rosa v. Kelly (In re Kelly), 582 B.R. 905, 909-10 (Bankr.
S.D. Tex. 2018) (“In 2005, Congress broadened the range of student loans that were to be considered nondischargeable
under § 523(a)(8) by adding § 523(a)(8)(A)(ii) to encompass loans made by nongovernmental and profit-making
organizations . . . Because there is no requirement that the loan be directly tied to a government unit, § 523(a)(8)(A)(ii)
has been more broadly applied to cases where [a] third part[y], not the government, is the party holding the debt.”).
72 E.g., Iuliano, supra note 10, at 496; Rafael I. Pardo & Michelle R. Lacey, The Real Student Loan Scandal: Undue
Hardship Discharge Litigation, 83 AM. BANKR. L.J. 179, 190 (2009) [hereinafter Pardo & Lacey, Scandal].
73 See Hicks v. Educ. Credit Mgmt. Corp. (In re Hicks), 331 B.R. 18, 23 (Bankr. D. Mass. 2005) (“The Congressional

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the federal judiciary.74 However, the U.S. Supreme Court has not yet directly opined on the
meaning of “undue hardship,”75 and the Court recently denied certiorari in a case that presented
the Court with the opportunity to further interpret that term.76
In the absence of a controlling interpretation of Section 523(a)(8) from the Supreme Court, the
lower courts have devised several different legal standards for determining whether declining to
discharge a student loan would amount to an “undue hardship.” The two most common standards
are described below.77

The Brunner Test
The vast majority78 of courts—specifically the U.S. Courts of Appeals for the Second, Third,
Fourth, Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits,79 as well as the U.S.
Bankruptcy Court for the District of Columbia—have interpreted “undue hardship” to require the
debtor to prove three things:
1. 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. additional circumstances exist indicating that the debtor’s inability to pay is
likely to persist for a significant portion of the repayment period of the student
loans; and
3. the debtor has made good faith efforts to repay the loans.80
record provides little guidance as to what constitutes undue hardship under § 523(a)(8).”); Educ. Credit Mgmt. Corp. v.
Nys (In re Nys), 446 F.3d 938, 943 (9th Cir. 2006) (“Congress provided little in the way of express legislative intent
specifically addressing the ‘undue hardship’ requirement when it passed the statute.”); O’Hearn v. Educ. Credit Mgmt.
Corp. (In re O’Hearn), 339 F.3d 559, 564 (7th Cir. 2003) (“Nor does the legislative history provide meaningful
guidance.”).
74 E.g., Iuliano, supra note 10, at 496; Pardo & Lacey, Scandal, supra note 72, at 190.
75 See, e.g., Hoffman v. Tex. Guaranteed Student Loan Corp. (In re Williams), Case No. 15-41814, Adv. No. 16-4006,
2017 WL 2303498, at *4 (Bankr. E.D. Tex. May 25, 2017) (“[‘Undue hardship’] is not defined in the Bankruptcy
Code, nor has any particular judicial definition been endorsed by any decision of the United States Supreme Court.”).
Although the Supreme Court has mentioned the “undue hardship” standard in passing on at least two occasions, the
Court has not yet defined the standard’s contours. See United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 26379 (2010); Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440, 443-55 (2004).
76 See Tetzlaff v. Educ. Credit Mgmt. Corp., 136 S. Ct. 803 (2016).
77 In addition to the two tests described in this report, some courts previously applied a variety of other legal tests to
determine whether a debtor qualified for an undue hardship discharge. See, e.g., Robert F. Salvin, Student Loans,
Bankruptcy, and the Fresh Start Policy: Must Debtors be Impoverished to Discharge Educational Loans?, 71 TUL. L.
REV. 139, 153-164 (1996) (describing the “Johnson” and “Bryant” standards in addition to the Brunner and totality-ofthe-circumstances tests). However, because these alternative tests have fallen into disuse and obscurity, this report does
not discuss them in detail. See Swedback & Prettner, supra note 52, at 1684 (“Over the years, courts have developed
several legal tests to give practical effect to the legal standard intended by Congress, but only two of these tests
effectively remain: the Brunner test and the totality-of-the-circumstances test.”); Hon. Terrence L. Michael & Janie M.
Phelps, “Judges?! – We Don’t Need No Stinking Judges!!!”: The Discharge of Student Loans in Bankruptcy Cases and
the Income Contingent Repayment Plan, 38 TEX. TECH L. REV. 73, 83 n.57 (2005) (acknowledging the Johnson and
Bryant tests, but explaining that “recent opinions have narrowed to field to the” Brunner and totality-of-the
circumstances tests).
78 See, e.g., Iuliano, supra note 10, at 496 (“[T]he Brunner standard has come to dominate the field.”).
79 This report references a significant number of decisions by federal appellate courts of various regional circuits. For
purposes of brevity, references to a particular circuit in the body of this report (e.g., the First Circuit) refer to the U.S.
Court of Appeals for that particular circuit.
80 Brunner v. N.Y. State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987). See also Penn. Higher Educ.

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The debtor must prove each of these elements by a preponderance of the evidence.81
This standard is commonly called the “Brunner” test,82 after the Second Circuit case in which the
standard originated.83 The Brunner test is highly fact-intensive,84 and not all courts apply the
Brunner standard the same way.85 Indeed, each factor has resulted in various subsidiary splits in
the courts with respect to a host of issues, including








the types of expenses a debtor seeking an undue hardship discharge may
permissibly incur;
the legal standard the debtor must satisfy to prove that his inability to repay the
student loans will likely persist into the future;
whether a debtor who claims that a medical condition prevents him from
repaying his student loans must introduce corroborating medical evidence to
support his claim;
whether a debtor seeking an undue hardship discharge must attempt to maximize
his income by seeking employment opportunities outside his field of training;
whether it is proper to consider the value of the education that the loan financed
when determining a debtor’s eligibility for an undue hardship discharge; and
whether the “additional circumstances” mentioned in Brunner’s second prong
must predate the issuance of the loan.

What follows is a description of the various factors that courts consider when evaluating each
prong of the Brunner test that highlights areas of disagreement between the federal courts.

The First Requirement: Inability to Maintain Minimal Standard of Living
To obtain an undue hardship discharge in a Brunner jurisdiction, the debtor must first prove that
she “cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for
herself and her dependents if forced to repay the loans.”86 “Courts conduct this analysis by
comparing [the] debtor’s disposable income, determined as the difference between his monthly
income and his reasonable and necessary monthly expenses, with the monthly payment necessary

Assistance Agency v. Faish (In re Faish), 72 F.3d 298, 306 (3d Cir. 1995) (adopting Brunner test); Educ. Credit Mgmt.
Corp. v. Frushour (In re Frushour), 433 F.3d 393, 400 (4th Cir. 2005) (same); U.S. Dep’t of Educ. v. Gerhardt (In re
Gerhardt), 348 F.3d 89, 91 (5th Cir. 2003) (same); Oyler v. Educ. Credit Mgmt. Corp. (In re Oyler), 397 F.3d 382, 385
(6th Cir. 2005) (same); In re Roberson, 999 F.2d 1132, 1135 (7th Cir. 1993) (same); United Student Aid Funds, Inc. v.
Pena (In re Pena), 155 F.3d 1108, 1112 (9th Cir. 1998) (same); Educ. Credit Mgmt. Corp. v. Polleys, 356 F.3d 1302,
1309 (10th Cir. 2004) (same); Hemar Ins. Corp. of Am. v. Cox (In re Cox), 338 F.3d 1238, 1241 (11th Cir. 2003)
(same); Zook v. Edfinancial Corp. (In re Zook), Bankr. No. 05-00083, Adv. No. 05-10019, 2009 WL 512436, at *1
(Bankr. D.D.C. Feb. 27, 2009) (same).
81 E.g., Barrett v. Educ. Credit Mgmt. Corp. (In re Barrett), 487 F.3d 353, 358-59 (6th Cir. 2007); Educ. Credit Mgmt.
Corp. v. Mosley (In re Mosley), 494 F.3d 1320, 1324 (11th Cir. 2007).
82 See, e.g., Gerhardt, 348 F.3d at 91.
83 Brunner, 831 F.2d at 396.
84 E.g., Educ. Credit Mgmt. Corp. v. Buchanan, 276 B.R. 744, 752 (N.D. W. Va. 2002).
85 See, e.g., Hicks v. Educ. Credit Mgmt. Corp. (In re Hicks), 331 B.R. 18, 30 (Bankr. D. Mass. 2005) (arguing that,
even though “both the Tenth and Eleventh Circuits” have purportedly “adopt[ed] identical versions of the Brunner
test,” “the Brunner test as adopted by the Eleventh Circuit does not include the same considerations as the Brunner test
adopted by the Tenth Circuit”).
86 E.g., Brunner, 831 F.2d at 396.

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to repay the student loans.”87 This inquiry in turn requires the court to “review the reasonableness
of the [d]ebtor’s budget—particularly the allocation of projected expenses in relation to projected
income—as it determines [the debtor’s] capability to pay the [student loans] without undue
hardship.”88 When evaluating whether the debtor’s budget is reasonable, courts generally
disregard unnecessary expenses that “would provide funds that could be directed toward
repayment of the loan” if eliminated.89 Although performing this inquiry often requires the court
to scrutinize individual items in the debtor’s budget,90 courts nonetheless generally conclude that
it is unnecessary to “wade through a debtor’s budget to find all possible ways to create a
surplus”;91 instead, the court must “examine [the] debtor’s expense budget as a whole” to evaluate
whether that budget is reasonable.92
Courts have typically held that the debtor need not “live in poverty in order to satisfy the first
inquiry” of Brunner.93 Rather, “a minimal standard of living is a measure of comfort, supported
by a level of income, sufficient to pay the costs of specific items recognized by both subjective
and objective criteria as basic necessities.”94 As explained in an influential judicial opinion,
A minimal standard of living in modern American society includes these elements:
1. People need shelter, shelter that must be furnished, maintained, kept clean, and free of
pests. In most climates it also must be heated and cooled.
2. People need basic utilities such as electricity, water, and natural gas. People need to
operate electrical lights, to cook, and to refrigerate. People need water for drinking,
bathing, washing, cooking, and sewer. They need telephones to communicate.

87 McLaney v. Ky. Higher Educ. Assistance Auth., 375 B.R. 666, 674 (M.D. Ala. 2007). See also, e.g., Miller v. Sallie

Mae (In re Miller), 409 B.R. 299, 312 (Bankr. E.D. Pa. 2009) (explaining that the court must evaluate “the debtor’s
household income and those expenses necessary to meet his or her basic needs”). “On the income side, courts consider
all sources of income and revenue streams,” including, among other things, tax refunds. Tuttle v. Educ. Credit Mgmt.
Corp. (In re Tuttle), Case No. 16-28259-beh, Adv. No. 17-02116, 2019 WL 1472949, at *8, *10 (Bankr. E.D. Wis.
Mar. 31, 2019).
88 Pincus v. Graduate Loan Ctr. (In re Pincus), 280 B.R. 303, 317 (Bankr. S.D.N.Y. 2002). See also, e.g., Perkins v. Pa.
Higher Educ. Assistance Agency (In re Perkins), 318 B.R. 300, 305 (Bankr. M.D.N.C. 2004) (“The first prong of the
Brunner test . . . requires the court to examine the reasonableness of the expenses listed in the [debtor’s] budget.”).
89 Larson v. United States (In re Larson), 426 B.R. 782, 789 (Bankr. N.D. Ill. 2010). See also, e.g., Tuttle, 2019 WL
1472949, at *8 (“Courts . . . disregard any unnecessary or unreasonable expenses that could be reduced to allow for
payment of debt.”); Coplin v. U.S. Dep’t of Educ. (In re Coplin), Case No. 13-46108, Adv. No. 16-04122, 2017 WL
6061580, at *7 (Bankr. W.D. Wash. Dec. 6, 2017) (“The court . . . has discretion to minimize or eliminate expenses
that are not reasonably necessary to maintain a minimal standard of living.”); Miller, 409 B.R. at 312 (“Expenditures in
excess of a minimal standard of living may have to be reallocated to repayment of the outstanding student loan
depending upon the particular circumstances involved.”).
90 See, e.g., Perkins, 318 B.R. at 305-07 (listing types of expenses that courts “often f[i]nd to be inconsistent with a
minimal standard of living”).
91 E.g., Roundtree-Crawley v. Educ. Credit Mgmt. Corp. (In re Crawley), 460 B.R. 421, 436 n. 15 (Bankr. E.D. Pa.
2011).
92 E.g., McLaney, 375 B.R. at 675; Zook v. Edfinancial Corp. (In re Zook), Bankr. No. 05-00083, Adv. No. 05-10019,
2009 WL 512436, at *9 (Bankr. D.D.C. Feb. 27, 2009).
93 Zook, 2009 WL 512436, at *4. See also, e.g., Educ. Credit Mgmt. Corp. v. Waterhouse, 333 B.R. 103, 111
(W.D.N.C. 2005) (“Brunner’s ‘minimal standard of living’ does not require a debtor to live in squalor.”); McLaney,
375 B.R. at 674 (“A ‘minimal standard of living’ is not such that debtors must live a life of abject poverty.”); White v.
U.S. Dep’t of Educ. (In re White), 243 B.R. 498, 508 n.8 (Bankr. N.D. Ala. 1999) (“Poverty, of course, is not a
prerequisite to . . . dischargeability.”).
94 Zook, 2009 WL 512436, at *4; Douglas v. Educ. Credit Mgmt. Corp. (In re Douglas), 366 B.R. 241, 252 (Bankr.
M.D. Ga. 2007); Ivory v. United States (In re Ivory), 269 B.R. 890, 899 (Bankr. N.D. Ala. 2001).

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3. People need food and personal hygiene products. They need decent clothing and
footwear and the ability to clean those items when those items are dirty. They need the
ability to replace them when they are worn.
4. People need vehicles to go to work, to go to stores, and to go to doctors. They must have
insurance for and the ability to buy tags for those vehicles. They must pay for gasoline.
They must have the ability to pay for routine maintenance such as oil changes and tire
replacements and they must be able to pay for unexpected repairs.
5. People must have health insurance or have the ability to pay for medical and dental
expenses when they arise. People must have at least small amounts of life insurance
or other financial savings for burials and other final expenses.
6. People must have the ability to pay for some small diversion or source of recreation,
even if it is just watching television or keeping a pet.95

On the other hand, even though the debtor need not live an ascetic lifestyle to obtain an undue
hardship discharge, the debtor is nonetheless not “sheltered from making some personal and
financial sacrifices in order to repay the debt.”96 Many courts have therefore denied undue
hardship discharges in cases in which the debtor’s expenses were excessive,97 such as where the
debtor lived in an “unnecessarily large” home,98 dined too frequently in restaurants instead of
cooking at home,99 or spent money on inessential items like recreational boats.100

95 Ivory, 269 B.R. at 899. See also, e.g., Doernte v. Educ. Credit Mgmt. Corp. (In re Doernte), Bankr. No. 10-24280-

JAD, Adv. No. 15-2080-JAD, 2017 WL 2312226, at *5 (Bankr. W.D. Pa. May 25, 2017) (adopting the Ivory elements);
Cleveland v. Educ. Credit Mgmt. Corp. (In re Cleveland), 559 B.R. 265, 272 (Bankr. N.D. Ga. 2016) (same); Murray v.
ECMC (In re Murray), 563 B.R. 52, 58-59 (Bankr. D. Kan.), aff’d, Case No. 16-2838, 2017 WL 4222980 (D. Kan.
Sept. 22, 2017) (same).
96 Zook, 2009 WL 512436, at *4. See also, e.g., Halatek v. William D. Ford Fed. Direct Loan (Direct Loan)
Program/U.S. Dep’t of Educ. (In re Halatek), 592 B.R. 86, 97 (Bankr. E.D.N.C. 2018) (explaining that the first prong
of the Brunner test “does not mean . . . that the debtor is ‘entitled to maintain whatever standard of living she has
previously attained . . . “Minimal” does not mean preexisting, and it does not mean comfortable.’”) (quoting Gesualdi
v. Educ. Credit Mgmt. Corp. (In re Gesualdi), 505 B.R. 330, 339 (Bankr. S.D. Fla. 2013)).
97 See, e.g., Evans-Lambert v. Sallie Mae Servicing Corp. (In re Evans-Lambert), Bankr. No. 07-40014-MGD, Adv.
No. 07-5001-MGD, 2008 WL 1734123, at *5 (Bankr. N.D. Ga. Mar. 25, 2008) (“The Court finds Debtor’s reported
$250-$295 per month expense for phone service to be above a ‘minimal’ standard of living.”); Mandala v. Educ. Credit
Mgmt. Corp. (In re Mandala), 310 B.R. 213, 218-19, 221-23 (Bankr. D. Kan. 2004) (denying undue hardship discharge
where debtors spent “excessive” amounts of money on food, vitamins, and long distance telephone costs); Pincus v.
Graduate Loan Ctr. (In re Pincus), 280 B.R. 303, 311, 317-18 (Bankr. S.D.N.Y. 2002) (holding that debtor’s monthly
telephone, beeper, and cable expenses were “excessive” and denying undue hardship discharge).
98 See Miller v. Sallie Mae (In re Miller), 409 B.R. 299, 320-21 (Bankr. E.D. Pa. 2009).
99 See Lozada v. Educ. Credit Mgmt. Corp. (In re Lozada), 594 B.R. 212, 225 (Bankr. S.D.N.Y. 2018) (“A debtor is not
required to abstain entirely from dining out to satisfy the first prong of the Brunner test, but the Plaintiff’s practice of
frequently dining out is problematic.”); Richardson v. Educ. Credit Mgmt. Corp. (In re Richardson), No. 16-11197,
Adv. No. 17-01014, 2018 WL 4719083, at *5 (Bankr. S.D. Ga. Sept. 28, 2018) (“Debtor’s projected budget clearly
includes expenses exceeding the ‘minimal standard of living’ contemplated by the Brunner test . . . Debtor’s budget
. . . reflects he eats out almost every day . . . .”); Gibson v. ECMC (In re Gibson), 428 B.R. 385, 390 (Bankr. W.D.
Mich. 2010) (“The number and variety of restaurant charges . . . undercuts Ms. Gibson’s testimony that she is
minimizing unnecessary expenses. Eating out is a luxury, in the court’s view.”).
100 See Campton v. U.S. Dep’t of Educ. (In re Campton), 405 B.R. 887, 892 (Bankr. N.D. Ohio 2009) (denying undue
hardship discharge where debtor “continu[ed] to pay for amenities such as boats, cable television and cigarettes”).

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Judicial Disagreements Regarding the Reasonableness of Various Categories of
Expenses
To “determine whether someone’s expenses are unnecessary or unreasonable, whether someone is
paying for something that is not needed, or whether someone is paying too much for something
that is needed,” courts often rely on “common sense, knowledge gained from ordinary
observations in daily life, and general experience.”101 As explained below, however, courts
frequently disagree regarding what categories of expenses are unnecessary to maintain a minimal
standard of living for the purposes of the first Brunner prong.
For example, courts have reached divergent conclusions regarding whether a debtor seeking an
undue hardship discharge is permitted to tithe a portion of his income to a religious institution
that could otherwise go toward repaying his educational debt.102 As one court has observed,
“when [a debtor] elects to tithe rather than pay his nondischargeable debt, he is” effectively
“making donations using someone else’s money.”103 Some courts have therefore categorically
held that “tithing may not be done at the expense of student loan creditors.”104 These courts
reason that “if Congress intended to allow tithing . . . when determining undue hardship under
§ 523(a)(8) . . . Congress could have and would have drafted § 523(a)(8) to include a specific
provision allowing charitable giving as it did” when enacting several other sections of the
Bankruptcy Code.105 Other courts, by contrast, have held that “a bankruptcy judge should not
override a debtor’s commitment to tithing” when evaluating the reasonableness of a debtor’s
expenditures for the purposes of the Brunner test.106 The predominant approach, however, is to
neither treat religious tithing as per se allowable nor per se prohibited, but instead to examine
“bona fide tithing or charitable contributions . . . under the same reasonableness standard as other
reasonable and necessary expenses under a § 523(a)(8) undue hardship analysis.”107
101 Ivory v. United States (In re Ivory), 269 B.R. 890, 899-900 (Bankr. N.D. Ala. 2001). See also, e.g., McLaney v. Ky.

Higher Educ. Assistance Auth., 375 B.R. 666, 674 (M.D. Ala. 2007); McCafferty v. U.S. Dep’t of Educ. (In re
McCafferty), Case No. 14-04545-FPC7, Adv. No. 15-80015-FPC, 2015 WL 6445185, at *4 (Bankr. E.D. Wash. Oct.
23, 2015); Miller, 409 B.R. at 320.
102 See McCafferty, 2015 WL 6445185, at *4-6 (describing three different approaches taken by courts); Lozada, 594
B.R. at 223 (“There is a split of authority as to whether Congress intended religious and charitable donations to be
permissible expenses in determining undue hardship under § 523(a)(8).”) (quoting Educ. Credit Mgmt. Corp. v. Savage
(In re Savage), 311 B.R. 835, 842 (B.A.P. 1st Cir. 2004)); Educ. Credit Mgmt. Corp. v. Rhodes, 464 B.R. 918, 923-924
(W.D. Wash. 2012) (“Courts have come to differing conclusions as to whether charitable or religious donations should
be considered necessary expenses for the purpose of evaluating ‘undue hardship.’”); Fulbright v. U.S. Dep’t of Educ.
(In re Fulbright), 319 B.R. 650, 657-60 (Bankr. D. Mont. 2005) (discussing the “split of authority . . . on the issue of
whether charitable contributions such as tithing are reasonable expenses for purposes of determining undue hardship
under § 523(a)(8)”). See generally Theresa J. Pulley Radwan, Sword or Shield: Use of Tithing to Establish
Nondischargeability of Debt Following Enactment of the Religious Liberties and Charitable Donation Protection Act,
19 AM. BANKR. INST. L. REV. 471 (2011) [hereinafter Radwan, Sword or Shield].
103 Lozada, 594 B.R. at 224.
104 Allen v. Am. Educ. Servs. (In re Allen), 329 B.R. 544, 552 & nn.4-5 (Bankr. W.D. Pa. 2005). See also, e.g.,
Fulbright, 319 B.R. at 660 (“Religious . . . donations are per se not proper expenses in determining whether
discharging student loan debt would result in undue hardship under § 523(a)(8).”).
105 E.g., Fulbright, 319 B.R. at 660.
106 E.g., Durrani v. Educ. Credit Mgmt. Corp. (In re Durrani), 311 B.R. 496, 504 (Bankr. N.D. Ill. 2004), aff’d, 320
B.R. 357 (N.D. Ill. 2005).
107 McLaney, 375 B.R. at 682. See also, e.g., Lozada, 594 B.R. at 223-24 (“[C]haritable giving expenses, such as
. . . tithes, must be evaluated on a case-by-case basis, ‘considering factors such as the amount and the debtor’s history
in order to determine whether, for that particular debtor, tithing constitutes a reasonably necessary expenditure.’”)
(quoting McCafferty, 2015 WL 6445185, at *6).

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Courts have likewise “split on whether cigarette expenses may be counted toward a minimal
standard of living” for the purposes of the Brunner test.108 A few courts have categorically held
that a debtor may not “discharge a student-loan obligation, thereby placing liability for the debt
upon the taxpayers, while continuing to pay for . . . cigarettes.”109 The predominant approach,
however, is to consider a debtor’s cigarette expenses on a case-by-case basis, instead of “holding
that cigarette expenses are per se unreasonable.”110
Similarly, courts have disagreed regarding whether a debtor seeking an undue hardship discharge
may contribute money to a retirement account that could otherwise go toward repaying the
student loan. Most courts have held that retirement contributions are not “reasonably necessary
for the support or maintenance of a debtor and thus may be considered as available income from
which a debtor seeking a § 523(a)(8) undue hardship discharge could use to repay an educational
loan.”111 A few other courts, however, have held that expenses “for retirement contributions” are
“allowable within the context of an ‘undue hardship’ analysis under § 523(a)(8),” at least “where
a debtor is fairly close to retirement, has not thus far saved anything for retirement, and is not
likely to improve his or her earnings ability such that he or she could otherwise save for
retirement.”112
Nor have courts agreed regarding who may receive money that might otherwise go toward
repaying the student loan. For instance, most courts have held that “a debtor seeking to discharge
her educational loans under § 523(a)(8) is . . . not permitted to support emancipated children or
other independent family members at the expense of her creditors.”113 These courts reason that it
is “unreasonable to expect creditors holding legitimate claims to remain unpaid to any extent
while the Debtor is supporting any adult children” or other nondependent adults “in her home.”114
108 Rendelman & Weingart, supra note 28, at 281 & n.469 (citing cases).
109 E.g., Campton v. U.S. Dep’t of Educ. (In re Campton), 405 B.R. 887, 892 (Bankr. N.D. Ohio 2009).
110 See Gharavi v. U.S. Dep’t of Educ. (In re Gharavi), 335 B.R. 492, 499-500 (Bankr. D. Mass. 2006) (listing cases).

See also, e.g., Metz v. Navient Educ. Loan Corp. (In re Metz), 589 B.R. 750, 758 (Bankr. D. Kan. 2018) (granting
partial discharge to debtor despite regular cigarette purchases).
111 Perkins v. Pa. Higher Educ. Assistance Agency (In re Perkins), 318 B.R. 300, 306-08 (Bankr. M.D.N.C. 2004)
(listing cases). See also, e.g., Richardson v. Educ. Credit Mgmt. Corp. (In re Richardson), No. 16-11197, Adv. No. 1701014, 2018 WL 4719083, at *5 (Bankr. S.D. Ga. Sept. 28, 2018) (“Debtor currently contributes $372 towards his
retirement plan. This deduction is clearly admirable, but it is not required to provide for Debtor’s basic necessities or to
maintain a minimal standard of living while paying his student loan debt.”); Gesualdi v. Educ. Credit Mgmt. Corp. (In
re Gesualdi), 505 B.R. 330, 341, 345 (Bankr. S.D. Fla. 2013) (“Voluntary contributions to retirement plans . . . are not
necessary to maintain a minimal standard of living.”); Pobiner v. Educ. Credit Mgmt. Corp. (In re Pobiner), 309 B.R.
405, 417-18 (Bankr. E.D.N.Y. 2004) (finding that debtors who voluntarily contributed to 401(k) plan could not prove
they were unable to “maintain a minimal standard of living if forced to repay the student loans”).
112 Allen v. Am. Educ. Servs. (In re Allen), 329 B.R. 544, 551-52 & n.3 (Bankr. W.D. Pa. 2005). See also Williams v.
Educ. Credit Mgmt. Corp. (In re Williams), 301 B.R. 62, 75 (Bankr. N.D. Cal. 2003) (“Debtors’ current expenses
include no contributions to a retirement account or pension plan. That should be reflected in even a minimal standard of
living for a middle-aged couple who lack savings.”).
113 Perkins, 318 B.R. at 306, 308. See also, e.g., Manion v. Modeen (In re Modeen), 586 B.R. 298, 307 (Bankr. W.D.
Wis. 2018) (“Courts criticize debtors who claim expenses for adult live-in children in the context of student loan
dischargeability.”); Gill v. Nelnet Loan Servs., Inc. (In re Gill), 326 B.R. 611, 633-34 (Bankr. E.D. Va. 2005)
(“Creditors should not be placed behind emancipated children and independent adults in the line for payment from a
debtor.”); Williams, 301 B.R. at 73 (finding “no support for the notion that a minimal standard of living under the first
prong of the Brunner test should include voluntary assumption of non-dependent family members’ expenses without a
legal obligation to do so” and eliminating expense for adult son’s health care from debtors’ monthly expense budget
accordingly).
114 Logan v. N.C. State Educ. Assistance Auth. (In re Logan), 263 B.R. 796, 800 (Bankr. W.D. Ky. 2000). See also
Educ. Credit Mgmt. Corp. v. Buchanan, 276 B.R. 744, 752 (N.D. W. Va. 2002) (“If given the choice between giving
money to their creditors or their legally independent children . . . most debtors would choose their children. Were this

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A few other courts, however, have held that there is no “hard and fast rule” prohibiting a debtor
seeking an undue hardship discharge from making “voluntary payments on behalf of adult
children.”115 These courts reason that “one’s ‘standard of living’ may sometimes be affected more
by the safety of one’s children—grown or not—than by such things as the quality of one’s
residence.”116 Importantly, however, the rule forbidding debtors from prioritizing their children
over their creditors applies only to nondependent adult children; a debtor’s obligation “to support
his minor children certainly must be considered” as a necessary expense “when determining the
[debtor’s] ability to repay his debts.”117
Courts have likewise split on whether a debtor may argue that his monthly expenses prevent him
from maintaining a minimal standard of living when the debtor expends a share of his income
caring for a disabled parent. Some courts have denied an undue hardship discharge to debtors
who chose to care for their disabled parents instead of seeking gainful employment, reasoning
that a “moral obligation to a family member . . . does not take priority over [the debtor’s] legal
obligation to repay her educational loans.”118 Several other courts, by contrast, have discharged
student debt even where the debtor quit a profitable job or allocated a portion of his income in
order to care for a disabled parent.119

Consideration of the Debtor’s Spouse’s Income
When conducting the first step of the Brunner analysis, most courts consider the debtor’s
spouse’s income in addition to the debtor’s income alone,120 even when the spouse has not

allowed, few debtors would be adjudged capable of repaying their debts.”); Manion, 586 B.R. at 307 (agreeing with
Logan); Gill, 326 B.R. at 633-34 (“Creditors should not be placed behind emancipated children and independent adults
in the line for payment from a debtor.”).
115 Educ. Credit Mgmt. Corp. v. Stanley, 300 B.R. 813, 818 (N.D. Fla. 2003). See also, e.g., Wilkinson-Bell v. Educ.
Credit Mgmt. Corp. (In re Wilkinson-Bell), Bankr. No. 03-80321, Adv. No. 06-8108, 2007 WL 1021969, at *5 (Bankr.
C.D. Ill. Apr. 2, 2007) (“This Court will not construe providing shelter, food and clothing to immediate family
members, a common, if voluntary, benevolence, as something for which the [debtor] is to be blamed for causing her
own hardship.”).
116 See, e.g., Stanley, 300 B.R. at 818.
117 Buchanan, 276 B.R. at 752 (emphasis added). See also 11 U.S.C. § 523(a)(8) (requiring the court to inquire whether
excepting a student loan from discharge “would impose an undue hardship on the debtor and the debtor’s dependents”
(emphasis added)).
118 Coveney v. Costep Servicing Agent (In re Coveney), 192 B.R. 140, 144 (Bankr. W.D. Tex. 1996). See also Perkins
v. Pa. Higher Educ. Assistance Agency (In re Perkins), 318 B.R. 300, 308 (Bankr. M.D.N.C. 2004) (holding that
expense that debtor “allocate[d] to the care of her mother” was not a proper expense for the purposes of Brunner’s first
prong).
119 See Rutherford v. William D. Ford Direct Loan Program (In re Rutherford), 317 B.R. 865, 875, 879, 881-85 (Bankr.
N.D. Ala. 2004) (granting undue hardship discharge even though debtor left job to care for disabled mother); Sequeira
v. Sallie Mae Servicing Corp. (In re Sequeira), 278 B.R. 861, 862, 866-67 (Bankr. D. Or. 2001) (granting partial
discharge even though debtor spent “$200 per month . . . for the care of her 83 year old mother”); Bene v. Educ. Credit
Mgmt. Corp. (In re Bene), 474 B.R. 56, 70 (Bankr. W.D.N.Y. 2012) (granting undue hardship discharge even though
debtor opted “to terminate educational opportunities in order to care for parents more than 20 years before filing for
bankruptcy relief”).
120 Educ. Credit Mgmt. Corp. v. Waterhouse, 333 B.R. 103, 109 (W.D.N.C. 2005) (“A majority of courts have
determined that it is proper to consider the economics of the debtor and the debtor’s spouse, as a family unit, when
determining ability to pay.”). See also, e.g., White v. U.S. Dep’t of Educ. (In re White), 243 B.R. 498, 509 n.9 (Bankr.
N.D. Ala. 1999) (listing numerous cases); Rosen v. Att’y Registration & Disciplinary Comm’n (In re Rosen), Bankr.
Case No. 15-0897 (DRC), Civil Case No. 16 C 10686, 2017 WL 4340167, at *8 (N.D. Ill. Sept. 29, 2017) (“Since the
standard-of-living inquiry is judged on a household basis, it is appropriate to consider a non-debtor spouse’s income
when determining whether a debtor can service his loans.”).

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declared bankruptcy as a co-debtor.121 Many courts likewise consider the income of a “live-in
companion, life partner, [or] contributing co-habitant” when “conducting th[e] minimal standard
of living analysis.”122 Courts have therefore generally denied an undue hardship discharge where
the debtor was married to a spouse “who could easily support them both, without any contribution
from” the debtor.123

The Second Requirement: Future Inability to Repay
If the debtor satisfies the first prong of Brunner, he must then prove that his inability to maintain
a minimal standard of living if forced to repay the loans is likely to persist into the future.124 To
make this showing, the debtor must show that “additional circumstances exist that illustrate he
will not be able to repay the loans for a substantial part of the repayment period.”125 Some courts
describe this requirement as “the heart of the Brunner test. It most clearly reflects the
congressional imperative that the debtor’s hardship must be more than the normal hardship that
accompanies any bankruptcy.”126 As is the case with the first prong of the Brunner test, courts
have applied different legal standards and considered various factors when conducting the second
inquiry, as illustrated below.

The “Certainty of Hopelessness” and “Exceptional Circumstances” Requirements
For instance, to determine whether the debtor’s inability to repay the loan while maintaining a
minimal standard of living is likely to persist into the future, most courts have required the debtor
to prove “that there is a ‘certainty of hopelessness’ that the debtor will be able to repay the loans
within the repayment period.”127 By contrast, a small number of courts have concluded that it is
inappropriate to require debtors to demonstrate a “certainty of hopelessness” in order to obtain an
undue hardship discharge.128 As one bankruptcy judge colorfully remarked,
121 See, e.g., Augustin v. U.S. Dep’t of Educ. (In re Augustin), 588 B.R. 141, 150 (Bankr. D. Md. 2018) (“Family

income, even that of non-debtor spouses, should be included in the analysis. In fact, the majority of courts have
considered the earnings of both the debtor and spouse for evaluating the debtor’s lifestyle.”) (emphasis added, internal
citations omitted).
122 Davis v. Educ. Credit Mgmt. Corp. (In re Davis), 373 B.R. 241, 248 (W.D.N.Y. 2007) (listing cases). But see
Coplin v. U.S. Dep’t of Educ. (In re Coplin), Case No. 13-46108, Adv. No. 16-04122, 2017 WL 6061580, at *7
(Bankr. W.D. Wash. Dec. 6, 2017) (considering only a portion of the debtor’s fiancé’s income for the purpose of the
Brunner step one analysis because the debtor and her fiancé had not yet “fully commingled their respective
households”).
123 E.g., White v. U.S. Dep’t of Educ. (In re White), 243 B.R. 498, 508, 514 (Bankr. N.D. Ala. 1999).
124 E.g., Brunner v. N.Y. State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987). For analysis of how far
into the future a bankruptcy court should look when evaluating whether the debtor’s inability to maintain a minimal
standard of living is likely to persist, see, e.g., Zook v. Edfinancial Corp. (In re Zook), Bankr. No. 05-00083, Adv. No.
05-10019, 2009 WL 512436, at *2 (Bankr. D.D.C. Feb. 27, 2009).
125 Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), 433 F.3d 393, 401 (4th Cir. 2005). See also, e.g., Brunner,
831 F.2d at 396; Tetzlaff v. Educ. Credit Mgmt. Corp., 794 F.3d 756, 759 (7th Cir. 2015); Craig v. Educ. Credit Mgmt.
Corp. (In re Craig), 579 F.3d 1040, 1044 (9th Cir. 2009).
126 Frushour, 433 F.3d at 401. See also, e.g., Gesualdi v. Educ. Credit Mgmt. Corp. (In re Gesualdi), 505 B.R. 330, 342
(Bankr. S.D. Fla. 2013).
127 Educ. Credit Mgmt. Corp. v. Mosley (In re Mosley), 494 F.3d 1320, 1326 (11th Cir. 2007). See also, e.g., Tetzlaff,
794 F.3d at 759; Spence v. Educ. Credit Mgmt. Corp. (In re Spence), 541 F.3d 538, 544 (4th Cir. 2008); Barrett v.
Educ. Credit Mgmt. Corp. (In re Barrett), 487 F.3d 353, 359 (6th Cir. 2007).
128 See, e.g., Educ. Credit Mgmt. Corp. v. Polleys, 356 F.3d 1302, 1310 (10th Cir. 2004); Jackson v. Educ. Res. Inst. (In
re Jackson), Bankr. No. 05-15085 (PCB), Adv. No. 06-01433, 2007 WL 2295585, at *6 n.11 (Bankr. S.D.N.Y. Aug. 9,
2007) (criticizing the “certainty of hopelessness standard” as “vague, speculative and completely subjective”).

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If Congress ever were to require this writer to instruct a student loan debtor that he or she
must carry the burden of proving that he or she has a “certainty of hopelessness,” this writer
would retire. There would be no way to reconcile such a command with the notion of a
“fresh start” for honest debtors. Some debtors, faced with such a standard, would not seek
bankruptcy relief at all, but rather would choose to be discharged by the Highest
Authority.129

Courts that reject the “certainty of hopelessness” standard instead make “a realistic look . . . into
[the] debtor’s circumstances and the debtor’s ability to provide for adequate shelter, nutrition,
health care, and the like” when determining whether the debtor’s inability to repay is likely to
persist into the future.130 Although at least one debtor has asked the Supreme Court to grant
certiorari to determine whether the Brunner test requires debtors to demonstrate “a ‘certainty of
hopelessness,’”131 the Supreme Court has thus far declined the invitation.132
Similarly, whereas most courts require the debtor to demonstrate “exceptional,” “unique,”
“extraordinary,” “extreme,” or “rare” circumstances in order to satisfy the second Brunner
prong,133 the Ninth Circuit has held that “‘undue hardship’ does not require an exceptional
circumstance beyond the inability to pay now and for a substantial portion of the loan’s
repayment period.”134

Multifactor Standards
Some courts have developed lists of factors to consider when determining whether a debtor’s
inability to repay a student loan is likely to persist into the future. For instance, the Ninth Circuit
has enumerated the following twelve nonexhaustive factors, which several courts outside the
Ninth Circuit have also adopted:








serious mental or physical disability of the debtor or the debtor’s dependents
which prevents employment or advancement;
the debtor’s obligations to care for dependents;
lack of, or severely limited education;
poor quality of education;
lack of usable or marketable job skills;
underemployment;
maximized income potential in the chosen educational field, and no other more
lucrative job skills;

129 Bene v. Educ. Credit Mgmt. Corp. (In re Bene), 474 B.R. 56, 63 n.7 (Bankr. W.D.N.Y. 2012).
130 E.g., Polleys, 356 F.3d at 1310; Demmons v. R3 Educ., Inc. (In re Demmons), Case No. 14-11638, Adv.P. No. 15-

1024, 2016 WL 5874831, at *5 (Bankr. E.D. La. Oct. 7, 2016).
131 See Petition for Writ of Certiorari, Tetzlaff v. Educ. Credit Mgmt. Corp., 136 S. Ct. 803 (No. 15-485), at I.
132 See Tetzlaff, 136 S. Ct. 803 (denying petition for writ of certiorari).
133 See, e.g., Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), 433 F.3d 393, 396, 401, 404 (4th Cir. 2005); In re
Roberson, 999 F.2d 1132, 1136 (7th Cir. 1993); McLaney v. Ky. Higher Educ. Assistance Auth., 375 B.R. 666, 673
(M.D. Ala. 2007).
134 Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 446 F.3d 938, 941 (9th Cir. 2006). See also Douglas v. Educ. Credit
Mgmt. Corp. (In re Douglas), 366 B.R. 241, 256 (Bankr. M.D. Ga. 2007) (“The debtor is not required to prove that her
financial situation will persist due only to a serious illness, psychological problem, disability, or other exceptional
circumstance . . . .” (emphasis added)).

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





limited number of years remaining in the debtor’s work life to allow payment of
the loan;
age or other factors that prevent retraining or relocation as a means for payment
of the loan;
lack of assets, whether or not exempt from creditors in bankruptcy, which could
be used to pay the loan;
potentially increasing expenses that outweigh any potential appreciation in the
value of the debtor’s assets and/or likely increases in the debtor’s income; and
lack of better financial options elsewhere.135

Other bankruptcy courts, by contrast, consider the following five factors:






the debt amount;
the interest rate;
whether the debtor has attempted to minimize expenses;
the debtor’s income, earning ability, health, education, dependents, age, wealth,
and professional degree; and
whether the debtor has attempted to maximize income by seeking or obtaining
employment commensurate with his education and abilities.136

Still other courts reject some or all of these factors.137

Medical Condition/Disability
Although many debtors who successfully satisfy the second Brunner prong suffer from a medical
condition that renders them unable to repay their student loans,138 “the existence of a debilitating
medical condition is not a prerequisite to establishing the existence of ‘undue hardship’ under
§ 523(a)(8).”139 But just as a medical disability is not a necessary condition to obtain an undue
135 Nys, 446 F.3d 938, 947 (9th Cir. 2006); Wright v. RBS Citizens Bank (In re Wright), Bankr. No. 12-05206-TOM-7,

Adv. No. 13-00025-TOM, 2014 WL 1330276, at *5 (Bankr. N.D. Ala. Apr. 2, 2014); Roundtree-Crawley v. Educ.
Credit Mgmt. Corp. (In re Crawley), 460 B.R. 421, 438 n. 20 (Bankr. E.D. Pa. 2011); In re Hamilton, No. 07-68258MHM, 2009 WL 6499258, at *1-2 (Bankr. N.D. Ga. Mar. 23, 2009).
136 See, e.g., Pietras v. U.S. Dep’t of Educ. (In re Pietras), Bankr. No. 09-38083, Adv. No. 10-3124, 2012 WL 466432,
at *4 (Bankr. N.D. Ohio Feb. 13, 2012); Looper v. U.S. Dep’t of Educ. (In re Looper), Bankr. No. 05-38187, Adv. No.
06-3042, 2007 WL 1231700, at *4 (Bankr. E.D. Tenn. Apr. 25, 2007).
137 See Jones v. Bank One Tex., 376 B.R. 130, 136-40 & n.6 (W.D. Tex. 2007) (concluding that the Ninth Circuit’s
twelve-factor test was inconsistent with Fifth Circuit precedent); Burton v. Educ. Credit Mgmt. Corp. (In re Burton),
339 B.R. 856, 873 n.33 (Bankr. E.D. Va. 2006) (“This Court declines to adopt the type of framework set forth by the
[Ninth Circuit] in Nys . . . .”).
138 Pardo & Lacey, Scandal, supra note 72, at 216 (empirical study suggesting that a debtor who suffers from a medical
condition (or whose dependent suffers from a medical condition) is more likely to successfully discharge a larger
percentage of her student loans); Rafael I. Pardo, Illness and Inability to Repay: The Role of Debtor Health in the
Discharge of Educational Debt, 35 FLA. ST. U. L. REV. 505, 505 (2008) [hereinafter Pardo, Illness] (“A medical
condition increased a debtor’s odds of being granted a discharge by 140%.”); Iuliano, supra note 10, at 525 (empirical
study finding that debtors who successfully obtained an undue hardship discharge “were more likely to have a medical
hardship”).
139 White v. Educ. Credit Mgmt. Corp. (In re White), Bankr. No. 07-41509, Adv. No. 07-4157, 2008 WL 5272508, at
*5 (Bankr. E.D. Tex. Dec. 17, 2008); Chime v. Suntech Student Loan (In re Chime), 296 B.R. 439, 445 (Bankr. N.D.
Ohio 2003). See also, e.g., Educ. Credit Mgmt. Corp. v. Polleys, 356 F.3d 1302, 1311 (10th Cir. 2004); Douglas, 366
B.R. at 256 (“The debtor is not required to prove that her financial situation will persist due only to a serious illness,

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hardship discharge, nor is it a sufficient condition for satisfying the second Brunner prong; many
courts have held that a medical condition will not support an undue hardship discharge unless it
“impairs [the debtor’s] ability to work.”140 In these jurisdictions, “the debtor must precisely
identify her problems and explain how her condition would impair her ability to work in the
future” before she may receive an undue hardship discharge.141 The debtor must also establish
that her “condition will likely persist for a significant portion of the repayment period of the
student loans.”142
Courts have disagreed regarding the quantum of proof a debtor must introduce in order to
establish that his medical condition renders him unable to pay his student loans. Some courts have
held that the debtor is not required “to submit independent medical evidence to corroborate his
testimony that his” medical condition “render[s] him unable to repay his student loans”; as long
as the debtor’s testimony regarding his medical condition is credible and sufficiently detailed,
then the debtor’s testimony alone can be sufficient to satisfy the second prong of the Brunner
test.143 Courts that reach this conclusion reason that
requiring that [debtors] provide corroborative medical evidence beyond their own
testimony in order to sustain the evidentiary burden for a hardship discharge of a student
loan on medical grounds is likely to prevent . . . debtors from receiving the relief to which
they are entitled because they “cannot afford to hire medical experts to testify to the effect
of their disease on their earning capacity.”144

Other courts, by contrast, have held that although the debtor need not necessarily hire a medical
expert to testify regarding the extent and severity of the debtor’s disability, the debtor does need
to introduce some form of corroborating medical evidence, such as medical records, or a letter
from a treating physician.145 In these jurisdictions, the “debtor’s testimony alone cannot establish
psychological problem, disability, or other exceptional circumstance; other types of circumstances could apply as
well.”).
140 Perkins v. Pa. Higher Educ. Assistance Agency (In re Perkins), 318 B.R. 300, 310 (Bankr. M.D.N.C. 2004) (listing
cases). See also, e.g., Tirch v. Penn. Higher Educ. Assistance Agency (In re Tirch), 409 F.3d 677, 681 (6th Cir. 2005)
(requiring the debtor to “explain how her condition would impair her ability to work in the future”); Brightful v. Pa.
Higher Educ. Assistance Agency (In re Brightful), 267 F.3d 324, 330 (3d Cir. 2001) (holding that debtor bore “the
burden of demonstrating how” her “emotional and psychiatric problems . . . impair[ed] her ability to work”); Duval v.
IRS (In re Duval), Bankr. No. 10-10450 (JMP), Adv. No. 11-02263 (JMP), 2012 WL 1123041, at *4 (Bankr. S.D.N.Y.
Apr. 3, 2012) (“Even in cases where a plaintiff can show a medical disability, courts continue to recognize the heavy
burden of requiring a showing that the disability is likely to pose a persistent obstacle to employment.”).
141 E.g., Tirch, 409 F.3d at 681.
142 E.g., Triplett v. ACS/PNC Educ. Loan Ctr. (In re Triplett), 357 B.R. 739, 743 (Bankr. E.D. Va. 2006); Hoskins v.
Educ. Credit Mgmt. Corp. (In re Hoskins), 292 B.R. 883, 888 (Bankr. C.D. Ill. 2003). A debtor who is totally and
permanently disabled may also be able to obtain an “administrative discharge” of her student loans outside the
bankruptcy process. This report discusses the administrative discharge option in a subsequent section. See infra
“Administrative Discharge.”
143 Educ. Credit Mgmt. Corp. v. Mosley (In re Mosley), 494 F.3d 1320, 1325-26 (11th Cir. 2007). See also, e.g., White,
2008 WL 5272508, at *5 (“A debtor is not required to present expert testimony to corroborate her own testimony about
her health.”); Benjumen v. AES/Charter Bank (In re Benjumen), 408 B.R. 9, 17-18 (Bankr. E.D.N.Y. 2009); Jackson v.
Educ. Res. Inst. (In re Jackson), Bankr. No. 05-15085 (PCB), Adv. No. 06-01433, 2007 WL 2295585, at *6 (Bankr.
S.D.N.Y. Aug. 9, 2007).
144 Jackson, 2007 WL 2295585, at *6. See also Doherty v. United Student Aid Funds, Inc. (In re Doherty), 219 B.R.
665, 669 (Bankr. W.D.N.Y. 1998).
145 Barrett v. Educ. Credit Mgmt. Corp. (In re Barrett), 487 F.3d 353, 360-61 (6th Cir. 2007); Pobiner v. Educ. Credit
Mgmt. Corp. (In re Pobiner), 309 B.R. 405, 419 (Bankr. E.D.N.Y. 2004) (“Student loan debtors claiming undue
hardship as a result of a medical condition must provide evidence to corroborate their claims . . . As Plaintiff did not
provide corroborating evidence from his physician or psychotherapist, this Court cannot make a finding that Plaintiff
suffers from any medical condition which would impact his ability to earn a living over a significant portion of the

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prong two of the Brunner test if the debtor’s health is at issue.”146 These courts reason that, as
laypersons, neither judges nor debtors “have a reliable basis to render” the “medical diagnosis
and prognosis” necessary “to determine the nature, extent and likely duration of a disability” as
contemplated by the second prong of Brunner.147

Employment Opportunities Outside the Debtor’s Chosen Field
Another issue that has divided the lower courts is whether a debtor may support his showing on
the second Brunner element by demonstrating that he cannot obtain more lucrative employment
in the field in which he received his degree, or if the debtor must instead attempt to maximize his
income by pursuing a career outside his chosen field. A few courts, most notably the Ninth
Circuit, have held that “a person who has chosen to go into a certain field and who, despite her
best efforts, has topped out in her career with no possibility of future advancement,” need not
necessarily “switch careers to try to obtain a higher paying job” in order to satisfy the second
Brunner prong.148 The majority of courts, however, have instead held that a debtor “who
completed an education in a low-paying field may not be heard to complain on that basis alone
that the field is too low-paying to permit repayment of the debts.”149 If the debtor cannot
maximize his income in the field in which he completed his education, most courts have required
the debtor to pursue more profitable employment opportunities outside his chosen field.150
Relatedly, most courts have held that a debtor cannot purposefully opt to work outside his area of
expertise if he would make more money working in the field in which he has been trained. 151 For
example, a debtor with a medical degree generally cannot leave a lucrative medical practice to
repayment period of the student loans.”); Brosnan v. Am. Educ. Servs. (In re Brosnan), 323 B.R. 533, 538 (Bankr.
M.D. Fla. 2005) (holding that a debtor “need not” introduce “extensive expert testimony,” but the debtor “must present
evidence which corroborates her own testimony regarding her medical difficulties”); Chime v. Suntech Student Loan
(In re Chime), 296 B.R. 439, 445 (Bankr. N.D. Ohio 2003) (“For example, if properly authenticated, letters from a
treating physician could be utilized.”).
146 Brosnan, 323 B.R. at 538. See also, e.g., Gesualdi v. Educ. Credit Mgmt. Corp. (In re Gesualdi), 505 B.R. 330, 343
n.13 (Bankr. S.D. Fla. 2013); Triplett v. ACS/PNC Educ. Loan Ctr. (In re Triplett), 357 B.R. 739, 744 (Bankr. E.D. Va.
2006); Hoskins v. Educ. Credit Mgmt. Corp. (In re Hoskins), 292 B.R. 883, 888 (Bankr. C.D. Ill. 2003).
147 Burton v. Educ. Credit Mgmt. Corp. (In re Burton), 339 B.R. 856, 875-77 (Bankr. E.D. Va. 2006). See also, e.g.,
Lozada v. Educ. Credit Mgmt. Corp. (In re Lozada), 594 B.R. 212, 226-27 (Bankr. S.D.N.Y. 2018) (“A judge can
observe the witness and hear him describe his symptoms, but a judge cannot make a diagnosis or determine the severity
of the impairment based on that alone.”) (quoting Norasteh v. Boston Univ. (In re Norasteh), 311 B.R. 671, 678
(Bankr. S.D.N.Y. 2004)).
148 E.g., Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 446 F.3d 938, 945 n.6 (9th Cir. 2006).
149 E.g., Kraft v. N.Y. State Higher Educ. Servs. Corp. (In re Kraft), 161 B.R. 82, 85-86 (Bankr. W.D.N.Y. 1993).
150 See, e.g., U.S. Dep’t of Educ. v. Gerhardt (In re Gerhardt), 348 F.3d 89, 93 (5th Cir. 2003) (“Nothing in the
Bankruptcy Code suggests that a debtor may choose to work only in the field in which he was trained, obtain a lowpaying job, and then claim that it would be an undue hardship to repay his student loans.”); Educ. Credit Mgmt. Corp.
v. Frushour (In re Frushour), 433 F.3d 393, 401 (4th Cir. 2005) (“Nor has [the debtor] indicated any specific steps she
has taken to seek higher-paying employment in other fields. Instead, she appears to be content with her present
employment as a decorative painter because it was her original goal to work in the arts, the area in which she initially
studied at Coastal Carolina. Having a low-paying job, however, does not in itself provide undue hardship . . . .”); Kraft,
161 B.R. at 85 (“The Brunner test does not permit a Debtor to work at less than a fully productive level while ‘holding
out’ for a job in the Debtor’s chosen field.”).
151 See, e.g., Bene v. Educ. Credit Mgmt. Corp. (In re Bene), 474 B.R. 56, 58 (Bankr. W.D.N.Y. 2012) (“A skilled
physician who chooses to remain a missionary after bankruptcy will not prevail under Brunner.”); Nixon v. Key Educ.
Res. (In re Nixon), 453 B.R. 311, 331 (Bankr. S.D. Ohio 2011) (“Elisabeth has not applied for teaching positions or
other positions in her fields of expertise. Yet she cannot fully satisfy the additional-circumstances prong without doing
so.”).

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pursue less profitable work as a missionary and then argue that he lacks the ability to repay his
loans.152 If “by education and experience” the debtor “qualifies for higher-paying work,” most
courts require the debtor “to seek work that would allow debt repayment before he can claim
undue hardship.”153

Educational Value
Courts have likewise disagreed regarding whether the value of the education that the student loan
financed should affect the debtor’s ability to discharge the loan. Some courts have held that “it is
not appropriate . . . to consider the ‘value’ of a debtor’s chosen education” when determining
“whether the three prongs of Brunner have been satisfied.”154 According to these courts,
considering whether
the education for which the loan paid has been of little use to [the debtor] is antithetical to
the spirit of the guaranteed loan program . . . Consideration of the ‘value’ of the education
in making a decision to discharge turns the government into an insurer of educational value.
Those students who make wise choices prosper; those who do not seek to discharge their
loans in bankruptcy. This is wholly improper.155

These courts have therefore concluded that “the Brunner test . . . does not permit discharge of a
student loan on the basis that the [d]ebtor made a poor career choice . . . in selecting the
curriculum that the loan financed.”156 These courts have likewise ruled that “a ‘debtor is not
entitled to an undue-hardship discharge by virtue of selecting an education that failed to return
economic rewards.’”157

152 See, e.g., Bene, 474 B.R. at 58 (Bankr. W.D.N.Y. 2012) (“A skilled physician who chooses to remain a missionary

after bankruptcy will not prevail under Brunner.”); Oyler v. Educ. Credit Mgmt. Corp. (In re Oyler), 397 F.3d 382, 386
(6th Cir. 2005) (“Oyler’s choice to work as a pastor of a small start-up church cannot excuse his failure to supplement
his income so that he can meet knowingly and voluntarily incurred financial obligations. By education and experience
he qualifies for higher-paying work and is obliged to seek work that would allow debt repayment before he can claim
undue hardship.”); Educ. Credit Mgmt. Corp. v. Waterhouse, 333 B.R. 103, 106, 112 (W.D.N.C. 2005) (denying undue
hardship discharge to debtor with Ph.D in organizational psychology who “decided to enter the ministry”).
153 Oyler, 397 F.3d at 386. See also, e.g., Educ. Credit Mgmt. Corp. v. Rhodes, 464 B.R. 918, 923 (W.D. Wash. 2012)
(denying undue hardship discharge where debtor was “employable as a librarian or as an IT professional,” but had
“focused his job search on home assistance work, which is markedly less lucrative”); Waterhouse, 333 B.R. at 112
(“Many courts have held that making the choice to take a low-paying job—regardless of how noble the profession—
cannot merit undue hardship relief.”); Evans-Lambert v. Sallie Mae Servicing Corp. (In re Evans-Lambert), Bankr. No.
07-40014-MGD, Adv. No. 07-5001-MGD, 2008 WL 1734123, at *6 (Bankr. N.D. Ga. Mar. 25, 2008) (denying undue
hardship discharge to federal public defender who had “the credentials and experience to obtain employment in the
private sector which could lead to higher levels of responsibility and a higher monthly salary”).
154 Gill v. Nelnet Loan Servs., Inc. (In re Gill), 326 B.R. 611, 638 n.16 (Bankr. E.D. Va. 2005). See also, e.g., Bene,
474 B.R. at 64 (deeming it “wholly improper” to consider “the ‘value’ of the education in making a decision to
discharge”); Pace v. Educ. Credit Mgmt. Corp. (In re Pace), 288 B.R. 788, 792 (Bankr. S.D. Ohio 2003) (“Courts
should not consider the lack of value or benefit of the education as a mitigating factor.”); Mathews v. Higher Educ.
Assistance Found. (In re Mathews), 166 B.R. 940, 943-44 n.3 & n.5 (Bankr. D. Kan. 1994) (“It is not relevant to
dischargeability for a court to determine that a student’s education . . . is of little value to the student or is in a field
where earning potential is limited and discharge loans on that basis.”).
155 Bene, 474 B.R. at 64. See also, e.g., Brightful v. Pa. Higher Educ. Assistance Agency (In re Brightful), 267 F.3d
324, 331 (3d Cir. 2001) (“Federal student loan programs were not designed to turn the government into an insurer of
educational value.”); In re Roberson, 999 F.2d 1132, 1136 (7th Cir. 1993) (“Consideration of the ‘value’ of the
education in making a decision to discharge turns the government into an insurer of educational value.”).
156 Kraft v. N.Y. State Higher Educ. Servs. Corp. (In re Kraft), 161 B.R. 82, 85 (Bankr. W.D.N.Y. 1993). See also
Norasteh v. Boston Univ. (In re Norasteh), 311 B.R. 671, 677 (Bankr. S.D.N.Y. 2004).
157 Educ. Credit Mgmt. Corp. v. Buchanan, 276 B.R. 744, 751 (N.D. W. Va. 2002). See also, e.g., Tuttle v. Educ. Credit

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Several of these courts have further held that “the Brunner test . . . does not permit discharge of a
student loan on the basis that” the school misled “the [d]ebtor . . . in selecting the curriculum that
the loan financed.”158 Some courts have accordingly denied undue hardship discharges even
where the debtor contended that the school defrauded him out of his tuition payments.159 These
courts justify their refusal to consider the educational value a debtor received on the ground that it
is “ineffectual” to discharge a student’s loans with the objective to “punish institutions for forcing
on students loans which are not in their best interests” because the adverse economic
consequences of the discharge are “borne not by the institution but by taxpayers, who absorb the
cost of the default.”160
Other courts, by contrast, have held that it is proper to consider the quality of the debtor’s
education when determining whether to grant an undue hardship discharge.161 These courts have
emphasized that, where a “school fails to educate the borrower properly, if at all,” the debtor may
be left “with no benefit from his ‘education’” and therefore “no ability to repay.”162 For instance,
in one notable case, the bankruptcy court granted the debtor a discharge in part because “the
actual course work offered by the” school that provided the debtor’s education was “of dubious
value.”163 In support of this conclusion, the court noted that “in the ‘marketing’ course [the
debtor] took ‘the instructor showed films of “Batman” the whole class.’”164 Similarly, some
jurisdictions consider whether the school closed before the debtor was able to complete the
education that the student loan financed when determining whether the debtor is entitled to an
undue hardship discharge.165

Mgmt. Corp. (In re Tuttle), Case No. 16-28259-beh, Adv. No. 17-02116, 2019 WL 1472949, at *15 (Bankr. E.D. Wis.
Mar. 31, 2019) (“[T]he debtor must accept the consequences of his decision to borrow. ‘If the leveraged investment of
an education does not generate the return the borrower anticipated, the student, not the taxpayers, must accept the
consequences of the decision to borrow.’”) (quoting In re Roberson, 999 F.2d 1132, 1137 (7th Cir. 1993)); Wright v.
RBS Citizens Bank (In re Wright), Bankr. No. 12-05206-TOM-7, Adv. No. 13-00025-TOM, 2014 WL 1330276, at *5
(Bankr. N.D. Ala. Apr. 2, 2014); Coveney v. Costep Servicing Agent (In re Coveney), 192 B.R. 140, 143 (Bankr. W.D.
Tex. 1996).
158 Kraft, 161 B.R. at 85. See also Norasteh, 311 B.R. at 677. See generally Aaron N. Taylor, Undo Undue Hardship:
An Objective Approach to Discharging Federal Student Loans in Bankruptcy, 38 J. LEGIS. 185, 214-216 (2012)
(criticizing some for-profit educational institutions for providing prospective students with “deceptive” information
“related to graduation rates, costs, and post-[graduation] employment prospects and salaries” “in order to encourage
enrollment and, in the process, secure federal financial aid funds”).
159 See, e.g., Gregory v. U.S. Dep’t of Educ. (In re Gregory), 387 B.R. 182, 188-90 (Bankr. N.D. Ohio 2008).
160 Bene, 474 B.R. at 64.
161 See, e.g., Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 446 F.3d 938, 947 (9th Cir. 2006); Wright, 2014 WL
1330276, at *5; In re Hamilton, No. 07-68258-MHM, 2009 WL 6499258, at *1 (Bankr. N.D. Ga. Mar. 23, 2009); Cota
v. U.S. Dep’t of Educ. (In re Cota), 298 B.R. 408, 418-19 (Bankr. D. Ariz. 2003) (granting undue hardship discharge
where debtor obtained “substandard education” that failed to provide him with any “economic benefit” because it “did
not qualify him for the work”).
162 See, e.g., Speer v. Educ. Credit Mgmt. Corp. (In re Speer), 272 B.R. 186, 192 (Bankr. W.D. Tex. 2001).
163 Hurley v. Student Loan Acquisition Auth. of Ariz. (In re Hurley), 258 B.R. 15, 18 n.5 (Bankr. D. Mont. 2001).
164 Id.
165 See Gregory v. U.S. Dep’t of Educ. (In re Gregory), 387 B.R. 182, 189 (Bankr. N.D. Ohio 2008) (holding that “the
untimely closure of a debtor’s educational institution” is relevant to (but not dispositive of) the debtor’s entitlement to
an undue hardship discharge); Kidd v. Student Loan Xpress, Inc. (In re Kidd), 472 B.R. 857, 864 (Bankr. N.D. Ga.
2012) (“The premature closure of a debtor’s school is but one factor for a court to consider.”). A student misled by an
educational institution or harmed by an institution’s premature closure may potentially have recourse outside the
bankruptcy system. A separate CRS product analyzes nonbankruptcy options available to such students. See generally
CRS Report R44737, The Closure of Institutions of Higher Education: Student Options, Borrower Relief, and
Implications, by Alexandra Hegji [hereinafter Hegji, Closure].

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The Debtor’s Age
Nor have courts agreed whether a debtor’s advanced age constitutes an “additional circumstance”
that can support a finding of undue hardship. Some courts have held that a debtor’s advanced age
can support an undue hardship finding, emphasizing that a debtor’s age can affect “not only her
job prospects, but also the number of years she will be able to remain in the work force.”166 Other
courts, however, have concluded that the debtor’s age does not constitute “an additional
circumstance to support the second prong under Brunner, at least where the age is standing alone
unaccompanied by serious illness or disability.”167 In particular, when a debtor incurs student
loans later in life, these courts have ruled that the fact that the debtor must continue to pay his
loans into advanced age is not sufficient in and of itself to satisfy Brunner’s second prong.168

Whether the “Additional Circumstances” Must Predate the Issuance of the
Loans
A small minority of courts have held that “the ‘additional circumstances’ required to meet the
second element” of the Brunner test “must be those that were not present at the time the debtor
applied for the loans or were exacerbated since that time.”169 These courts reason that, if the
debtor “experienced an illness, developed a disability, or became responsible for a large number
of dependents” before incurring the educational debt, he could have “calculated that factor into
his cost-benefit analysis” when deciding whether to take out the student loan.170
However, most courts do not explicitly impose any requirement that the requisite “additional
circumstances” postdate the issuance of the loan. Indeed, a few courts have explicitly rejected any
“distinction between pre-existing and later-arising ‘additional circumstances,’”171 opining that
166 See Bumps v. Wells Fargo Educ. Fin. Servs. (In re Bumps), Case No. 6:11-bk-06677-ABB, Adv. No. 6:12-ap-

00107-ABB, 2014 WL 185336, at *3 (Bankr. M.D. Fla. Jan. 15, 2014). See also, e.g., Nys, 446 F.3d at 947 (“The
factors a court may consider include . . . limited number of years remaining in the debtor’s work life to allow payment
of the loan . . . age or other factors that prevent retraining or relocation as a means for payment of the loan . . . .”);
Newman v. Educ. Credit Mgmt. Corp. (In re Newman), 304 B.R. 188, 197 (Bankr. E.D. Pa. 2002) (noting that “a
reasonable fact finder may consider the debtor’s age” when determining whether the debtor is entitled to an undue
hardship discharge); Allen v. Am. Educ. Servs. (In re Allen), 329 B.R. 544, 552-53 (Bankr. W.D. Pa. 2005)
(emphasizing debtor’s “relatively advanced age” and concluding “that the Debtor’s employment prospects and earning
ability will not improve, at least appreciably, during the balance of the repayment period”).
167 Goforth v. U.S. Dep’t of Educ. (In re Goforth), 466 B.R. 328, 339 (Bankr. W.D. Pa. 2012). See also, e.g., Bukovics
v. Navient (In re Bukovics), 587 B.R. 695, 707 (Bankr. N.D. Ill. 2018) (“Plaintiff’s age is . . . not particularly relevant
to the question of whether her circumstances represent a ‘certainty of hopelessness.’”).
168 See Conner v. U.S. Dep’t of Educ., Case No. 15-10541, 2016 WL 1178264, at *3 (E.D. Mich. Mar. 28, 2016)
(“One’s age cannot form the bases of a favorable finding for a debtor who chooses to pursue an education later in
life.”); Fabrizio v. U.S. Dep’t of Educ. Borrower Servs. Dep’t Direct Loans (In re Fabrizio), 369 B.R. 238, 249 (Bankr.
W.D. Pa. 2007) (“Nor can the Debtor rely on his age of 51 years as a discharge basis. The simple fact that the Debtor
will have to pay his educational loans later into life is merely a consequence of his decision to incur debt for
educational purposes during his thirties.”); Rosen v. Att’y Registration & Disciplinary Comm’n (In re Rosen), Bankr.
Case No. 15-0897 (DRC), Civil Case No. 16 C 10686, 2017 WL 4340167, at *9 (N.D. Ill. Sept. 29, 2017) (“Courts
nationwide have reached the same conclusion: repayment into advanced age is a consequence of taking out loans late in
life.”).
169 See Teague v. Tex. Guaranteed Student Loan Corp. (In re Teague), Case No. 15-34296-hdh7, Adv. No. 16-03007hdh, 2017 WL 187557, at *2 (Bankr. N.D. Tex. Jan. 17, 2017). See also, e.g., Hoffman v. Tex. Guaranteed Student
Loan Corp. (In re Williams), Case No. 15-41814, Adv. No. 16-4006, 2017 WL 2303498, at *6 (Bankr. E.D. Tex. May
25, 2017); Thoms v. Educ. Credit Mgmt. Corp. (In re Thoms), 257 B.R. 144, 149 (Bankr. S.D.N.Y. 2001).
170 See Thoms, 257 B.R. at 149.
171 Educ. Credit Mgmt. Corp. v. Mason (In re Mason), 464 F.3d 878, 883 (9th Cir. 2006). See also, e.g., Wilkinson-Bell
v. Educ. Credit Mgmt. Corp. (In re Wilkinson-Bell), Bankr. No. 03-80321, Adv. No. 06-8108, 2007 WL 1021969, at

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“Congress could have easily stated that, in determining the existence of ‘undue hardship,’ a court
must ignore any conditions a debtor might have had at the time she took out the loan she later
seeks to discharge.”172

The Third Requirement: Good Faith Efforts to Repay
Finally, Brunner’s third prong requires the debtor to demonstrate “good faith efforts to repay the
loans.”173 Most courts agree that “good faith is measured by the debtor’s efforts to obtain
employment, maximize income, and minimize expenses.”174 “The court may also consider
whether the debtor has tried to make some payments when he or she could, or has sought to defer
the loan or renegotiate the payment plan.”175

History of Payments
“In determining whether a debtor has made a good faith effort to repay a student loan obligation,
a primary consideration is whether the debtor actually made any payments on the obligation, and
if so, the total amount of payments.”176 Nevertheless, “a debtor’s ‘failure to make a payment,
standing alone, does not establish a lack of good faith,’”177 especially “where the debtor has no
funds to make any repayments.”178

Length of Time Elapsed Before the Debtor Sought Discharge
As explained above, Congress enacted Section 523(a)(8) partly to address the concern that
students “would file for bankruptcy relief immediately upon graduation.”179 For that reason,
*4 (Bankr. C.D. Ill. Apr. 2, 2007).
172 Wilkinson-Bell, 2007 WL 1021969, at *4 (Bankr. C.D. Ill. Apr. 2, 2007).
173 E.g., Brunner v. N.Y. State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987).
174 Hedlund v. Educ. Res. Inst. Inc. (In re Hedlund), 718 F.3d 848, 852 (9th Cir. 2013); Educ. Credit Mgmt. Corp. v.
Mosley (In re Mosley), 494 F.3d 1320, 1327 (11th Cir. 2007). See also, e.g., Tetzlaff v. Educ. Credit Mgmt. Corp., 794
F.3d 756, 760 (7th Cir. 2015); Spence v. Educ. Credit Mgmt. Corp. (In re Spence), 541 F.3d 538, 544 (4th Cir. 2008).
175 E.g., Zook v. Edfinancial Corp. (In re Zook), Bankr. No. 05-00083, Adv. No. 05-10019, 2009 WL 512436, at *11
(Bankr. D.D.C. Feb. 27, 2009).
176 Burton v. Educ. Credit Mgmt. Corp. (In re Burton), 339 B.R. 856, 882 (Bankr. E.D. Va. 2006). See also, e.g.,
Augustin v. U.S. Dep’t of Educ. (In re Augustin), 588 B.R. 141, 153 (Bankr. D. Md. 2018) (“Continual deferments
without making a payment or seeking out other payment options does not show good faith.”); Wright v. RBS Citizens
Bank (In re Wright), Bankr. No. 12-05206-TOM-7, Adv. No. 13-00025-TOM, 2014 WL 1330276, at *6 (Bankr. N.D.
Ala. Apr. 2, 2014) (“Courts are generally reluctant to find good faith where a debtor made minimal or no payments on
his or her student loans.”); Perkins v. Pa. Higher Educ. Assistance Agency (In re Perkins), 318 B.R. 300, 312 (Bankr.
M.D.N.C. 2004) (denying undue hardship discharge where debtor “had the ability over the years to make regular
payments on her educational loan indebtedness” yet “chose not to do so”).
177 E.g., Mosley, 494 F.3d at 1327 (quoting Educ. Credit Mgmt. Corp. v. Polleys, 356 F.3d 1302, 1311 (10th Cir.
2004)); Todd v. Access Grp., Inc. (In re Todd), 473 B.R. 676, 693 (Bankr. D. Md. 2012); McMullin v. U.S. Dep’t of
Educ. (In re McMullin), 316 B.R. 70, 81 (Bankr. E.D. La. 2004).
178 Burton, 339 B.R. at 882. See also, e.g., Uhrman v. U.S. Dep’t of Educ. (In re Uhrman), Bankr. No. 11-34511, Adv.
No. 11-3261, 2013 WL 268634, at *7 (Bankr. N.D. Ohio Jan. 24, 2013) (“The good faith requirement does not mandate
that payments must have been made when the debtor’s circumstances made such payment impossible.”); Perkins, 318
B.R. at 312 (“Failure to make payments will not preclude a finding of good faith if the debtor had no funds available
for payment toward the loan.”); Speer v. Educ. Credit Mgmt. Corp. (In re Speer), 272 B.R. 186, 197 (Bankr. W.D. Tex.
2001) (“Mere failure to make a minimal payment does not prevent a finding of good faith where a debtor has never had
the resources to make a payment.”).
179 Wetzel v. N.Y. State Higher Educ. Servs. Corp. (In re Wetzel), 213 B.R. 220, 224 (Bankr. N.D.N.Y. 1996). See also
supra “The Enactment of the Bankruptcy Code.”

Congressional Research Service

25

Bankruptcy and Student Loans

“some courts have looked to the length of time between when the loan first became due and when
the debtor sought discharge of the debt” when evaluating the debtor’s good faith.180 The less time
that has passed since the student loan first became due, the less likely it is that a court will
conclude that the debtor is seeking to discharge the loan in good faith.181

Ratio of Student Loan Debt to Total Indebtedness
Because Congress also sought to combat “consumer bankruptcies of former students motivated
primarily to avoid payment of education loan debts” when enacting Section 523(a)(8),182 many
courts also examine “the amount of the student loan debt as a percentage of the debtor’s total
indebtedness” when evaluating whether a debtor has satisfied Brunner’s good faith
requirement.183 “Where a debtor’s student loan debt constitutes a high percentage of the debtor’s
total debt,” many “courts have found that the debtor has not made a good faith effort to repay the
loan.”184
Other courts, while noting that the ratio of student loan debt to total indebtedness “may be
relevant” to the debtor’s good faith, nonetheless warn against “placing a substantial emphasis” on
the percentage of student loan debt, especially when “the [d]ebtor is not seeking to have his
student loans discharged prior to beginning a lucrative career.”185 Some courts consequently
advise against establishing a “bright-line percentage” above which “discharge of student-loan
debt should be deemed to be the motivating factor for bankruptcy.”186

180 Goforth v. United States of Am. Dep’t of Educ. (In re Goforth), 466 B.R. 328, 341 (Ban

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR45113. Public record. Not legal advice.