#Brunner v. New York State Higher Education Services Corp.

[gettothestabbing]

The new Rosenberg ruling has provided the legal precedent needed to make dismissal through bankruptcy easier, but this won’t solve the larger issue of soaring student debt. In fact, it perpetuates the problem.

Discharging the debt will undoubtedly help individual borrowers, but dismissing individual debt doesn’t mean it goes away. There is no magic to make it disappear; it simply shifts the burden. Someone has to pay, and this will inevitably fall on taxpayers.

Agreeing to let borrowers off the hook also perpetuates the broken system we have now. If you know your loans can be easily wiped out, what’s going to stop you from borrowing even more money and then filing for bankruptcy once the loans go into repayment?

Not to mention, student loans actually raise the cost of tuition. The more students borrow, the higher tuition becomes, which results in more students taking out even more student loans to pay for the increase in cost.

Making it easier for individuals to discharge their debts does nothing to fix the underlying problem: surging costs.

[hwaplc]

STUDENT LOANS: Court discharges medical student’s loans, to the extent of over $400K, based on hardship factors.

The Court set out the standard:

“B. Legal Standard Under § 523(a)(8), Koeut's student loans may be discharged in full, in part, or not at all, based upon the extent to which the court finds the repayment of these loans would constitute an undue hardship. Craig, 579 F.3d at 1045-46. Both Koeut and the DOE concede the court has authority to enter a partial discharge pursuant to its equitable authority under § 105(a). Saxman v. Educ. Credit Mgmt. BJR Corp. (In re Saxman), 325 F.3d 1168, 1174 (9th Cir. 2003) (holding that a debtor is entitled to a discharge of that portion of the student loan that meets the requirements of § 523(a)(8)); Educ. Credit. Mgmt. Corp. v. Jorgensen (In re Jorgensen), 479 B.R. 79, 86 (B.A.P 9th Cir. 2012) (applying each element of the Brunner test to the partial discharge analysis). The Ninth Circuit in United Student Aid Funds v. Pena (In re Pena), 155 F.3d 1108, 1112 (9th Cir. 1998), adopted the three part test ("Brunner test") for determining undue hardship articulated in Brunner v. New York State Higher Educ. Services Corp., 831 F.2d 395, 396 (2nd Cir. 1987):  (a) 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; (b) 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 (c) the debtor has made good faith efforts to repay the loans. Each factor is addressed below.”