Recent Decisions Deepen and Entrench Circuit Split on Discharging Student Loans

There are two and perhaps three tests among the circuit courts for deciding when the repayment of a student loan amounts to an “undue hardship,” enabling the court to discharge the debt under Section 523(a)(8). Discharging a student loan is conceivable under the Eighth Circuit’s somewhat lenient “totality of the circumstances” test. In the majority of circuits employing the so-called Brunner test, discharging a student loan is exceedingly difficult. Although professing to follow Brunner, the Fifth Circuit’s new test means that student loans are essentially impossible to discharge. Decisions in late July by the Fifth Circuit and the First Circuit Bankruptcy Appellate Panel underscore the need for the Supreme Court to grant certiorari and resolve the circuit split.

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