{
  "id": "R45113",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R45113",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 605094,
      "date": "2019-07-18",
      "retrieved": "2019-09-17T22:21:16.771001",
      "title": "Bankruptcy and Student Loans",
      "summary": "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\u2014that is, obtain relief from\u2014debts 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 \u201cundue hardship\u201d upon the debtor and his dependents.\nThe Bankruptcy Code does not define \u201cundue hardship,\u201d 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.\nThe vast majority of courts have interpreted \u201cundue hardship\u201d to require the debtor to prove three things: (1) the debtor cannot maintain, based on current income and expenses, a \u201cminimal\u201d standard of living for himself and his dependents if forced to repay the loans; (2) additional circumstances exist indicating that the debtor\u2019s 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 \u201cBrunner\u201d 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.\nWhereas 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 \u201cthe totality-of-the-circumstances test,\u201d weighing numerous, nonexclusive factors when considering whether student loan debt should be discharged.\nIn 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\u2019s undue hardship provision. These proposals implicate a variety of legal issues that Congress may consider.",
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      "typeId": "REPORTS",
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      "topics": [
        {
          "source": "IBCList",
          "id": 4755,
          "name": "Judicial Branch"
        },
        {
          "source": "IBCList",
          "id": 4906,
          "name": "Postsecondary Education"
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    {
      "source": "EveryCRSReport.com",
      "id": 578639,
      "date": "2018-02-22",
      "retrieved": "2018-05-10T11:19:45.901285",
      "title": "Bankruptcy and Student Loans",
      "summary": "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 \u201cdischarge\u201d\u2014that is, obtain relief from\u2014debts 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 \u201cundue hardship\u201d upon the debtor and his dependents.\nThe Bankruptcy Code does not define \u201cundue hardship,\u201d and the legislative history of Section 523 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.\nThe vast majority of courts have interpreted \u201cundue hardship\u201d to require the debtor to prove three things: (1) the debtor cannot maintain, based on current income and expenses, a \u201cminimal\u201d standard of living for himself and his dependents if forced to repay the loans; (2) additional circumstances exist indicating that the debtor\u2019s 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 \u201cBrunner\u201d 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.\nWhereas 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 \u201cthe totality-of-the-circumstances test,\u201d weighing numerous, nonexclusive factors when considering whether student loan debt should be discharged.\nIn response to this split of authority, some Members of Congress and commentators have advanced numerous proposals to alter the way that student loans are treated in bankruptcy. This report therefore 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 \u201cundue hardship.\u201d 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\u2019s current treatment of student loans.",
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      "topics": [
        {
          "source": "IBCList",
          "id": 4755,
          "name": "Judicial Branch"
        },
        {
          "source": "IBCList",
          "id": 4906,
          "name": "Postsecondary Education"
        }
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  "topics": []
}