Best Sources of Student Loan Undue Hardship Case Law

 

If you decide to challenge your student loan as dischargeable to due unto hardship, it's good take time to read other undue hardship cases you get a sense of what's required in order to prevail.

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This is the place to find caselaw about student loan discharges.

Section 523(a)(8) does not define what undue hardship is, so it has been left to each judge to define it.

Until about 2014, I tried to keep a database of lower court student loan cases to look for patterns among judges so that debtors could know whether it be worth trying to file a student loan discharge adversary proceeding depending on which judge they had drawn for the bankruptcy case. 

As of this writing in November of 2022, the Department of Education lawyers have been authorized to stipulate to agreeing to discharges if certain financial criteria are met.

Hopefully, undue hardship discharges will become more standardized and less dependent on the whims of judges.

In the meantime, we are going to continue to try to publicize which judges have offered student loan hardship discharges and which ones have not, and direct you to the best sources of student loan case law research. In short, we're going to teach you to fish and find your own relevant case law

Google Scholar

Google Scholar is a special subset of Google search that focuses just on case law and academic research.

It has an extensive collection of case law and powerful search tools that make it easy to find relevant case law about student loans and maybe even some cases that your judges have written.

Finding 'undue hardship' cases

The easiest way to find new hardship cases is to go to Google scholar and search for the term "student loan undue hardship 523(a)(8)". We've done that here.

Once you've found one student loan case, use the features in Google Scholar to find other cases that have cited that case. 

To find more recent cases, you can narrow the search by date or you can sort by date to find the most recent cases. You may notice that that search query turns up 12,000 cases so you may not want to look at all of them. :) 

As of this writing there have been 20 relevant cases in just the past 30 days.

There are some general agreed  upon principles you'll find:

 "Student loans are presumptively non-dischargeable  in bankruptcy."[12] However, pursuant to 11 U.S.C. § 523(a)(8), a student loan can be discharged if repayment of the debt will impose an undue hardship on the debtor and the debtor's dependents.[13] Thus, a debtor who claims "undue hardship" to defeat the statutory presumption against a 309*309 student loan discharge must make the following specific factual showing by a preponderance of the evidence:

(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.[14]

[12] Easterling v. Collecto, Inc., 692 F.3d 229, 231 (2d Cir. 2012) (citing 11 U.S.C. § 523(a)(8)).

[13] See United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 277 & n.13, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010) ("Section 523(a)(8) renders student loan debt presumptively nondischargeable `unless' a determination of undue hardship is made"); Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440, 450, 124 S.Ct. 1905, 158 L.Ed.2d 764 (2004) (noting that "Section 523(a)(8) is self-executing," such that "[u]nless the debtor affirmatively secures a hardship determination, the discharge order will not include a student loan debt").

[14] Brunner, 831 F.2d at 396see also Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (holding that "the standard of proof for the dischargeability exceptions in 11 U.S.C. § 523(a) is the ordinary preponderance-of-the-evidence standard").

Cases that say the private loan is not a "Student Loan" that is included in the 532(a)(8) exception to discharge

The Second Circuit ruled in Homaidan v. Sallie Mae, Inc., 3 F. 4th 595 - Court of Appeals, 2nd Circuit 2021 that private student loans are excepted from discharge under 11 USC § 523 (a)(8)(A)(ii) only if they were made to individuals attending eligible schools for certain qualified expenses. In this case

"two direct-to-consumer Tuition Answer Loans, totaling $12,567, from Sallie Mae Inc., a corporation to which Navient is the successor. Although the loans helped underwrite Homaidan's college education, they were not made through Emerson's financial aid office, nor—Homaidan alleges—were they made solely to cover Emerson's cost of attendance. They went straight to Homaidan's bank account, and the loan proceeds exceeded the cost of Emerson's tuition." 

These loans were found to be dischargeable, as being outside the scope of non-dischargeable student loans, because they just went to living expenses, not educational expenses.

See also: 10 Tips to Determine if a Private Student Loan Is a “Qualified Education Loan” [NCLC]

Following a case to find other cases

What is the technique to find good cases to follow a case that has ruled in favor of a debtor and then find other cases that have cited that case to make similar rulings in favor of student debtors?

Searching for cases by your judge

Another thing you can do in Google Scholar is search for cases by the name of the judge.

So once you know which judge has been assigned to your bankruptcy case, you can look to see if they have ever heard an undue hardship case and, if so, whether they are generous or stingy.

You might want to take that same search query above ("student loan undue hardship 523(a)(8)") and add your judge's name to it and see what comes up.

The NCLC Student Loan Borrower Assistance Center

The National Consumer Law Center (NCLC) is an invaluable resource to consumers looking to understand the law and their rights, especially student loans.

In addition to being up on all the latest student loan announcements, they have a special public-facing section for student loan debtors, which provides resources of all kinds, including information about how to apply for various government forbearance and cancellation programs as well as how to handle student loan cases in bankruptcy. Some of their information includes extensive footnotes that have citations to caselaw which you can then research further with Google scholar.

It offers a list of undue hardship examples that have been upheld and sample documents for you to use and modify if you request a determination of undue hardship. 

 


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Jurisdictional relevance: US

Legal Consumer - Centerville, MOLaw. The content of this article pertains to all US states and counties.