	Introduction

The aggregate student loan debt owed by borrowers in the United States has increased markedly over time. As overall student loan indebtedness has increased, many borrowers have found themselves unable to repay their student loans. Declaring bankruptcy is one means by which an individual may potentially obtain relief from a student loan that he cannot repay. 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 variou s 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. Interpreting "Undue Hardship"

The Bankruptcy Code does not define "undue hardship," 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. The Brunner Test

The vast majority of courts—specifically the U.S. Courts of Appeals for the Second, Third, Fourth, Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits, 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. The debtor must prove each of these elements by a preponderance of the evidence. This standard is commonly called the " Brunner " test, after the Second Circuit case in which the standard originated. The Brunner test is highly fact-intensive, and not all courts apply the Brunner standard the same way. The "Totality-of-the-Circumstances" Test

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 circuits have explicitly declined to adopt the Brunner standard. Defining "undue hardship" would also allow Congress to resolve one or more of the aforementioned doctrinal splits that currently exist in the federal courts, such as
whether undue hardship determinations should be governed by the Brunner test, the totality-of-the-circumstances test, or some other legal standard; whether a debtor seeking an undue hardship discharge may tithe a portion of her income that might otherwise go toward repaying her student loans to a religious institution; whether a debtor must demonstrate "exceptional circumstances" or a "certainty of hopelessness" in order to obtain an undue hardship discharge; whether a debtor seeking an undue hardship discharge on the grounds of a medical disability must introduce corroborating medical evidence; whether the Bankruptcy Code authorizes the partial discharge of a student loan; whether, and to what extent, a debtor's eligibility for and participation in an IDR plan affects the debtor's eligibility for an undue hardship discharge; whether a cosigner of a student loan who does not directly obtain an educational benefit from the loan must demonstrate an undue hardship in order to discharge his own obligation for the loan in his own bankruptcy case; and whether courts should consider the value of the education that the loan financed when evaluating whether the debtor is entitled to an undue hardship discharge.
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.
The Bankruptcy Code does not define "undue hardship," 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.
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, 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 "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.