1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-27-1995

Leeper & Webster v PHEAA

Precedential or Non-Precedential:

Docket 94-3372

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1995 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Leeper & Webster v PHEAA" (1995). 1995 Decisions. Paper 62.

http://digitalcommons.law.villanova.edu/thirdcircuit_1995/62
 UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT 

 

 Nos. 94-3372 & 94-3373 

 

 LISA LEEPER; WILLIAM LEEPER; 

 DWIGHT WEBSTER and DELLA WEBSTER, 

 Appellants

v. 

 PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, 

 (PHEAA), STUDENT LOAN SERVICE CENTER; 

 GARY J. GAERTNER, 

 Trustee

 

 

 On Appeal from the United States District Court 

 For the Western District of Pennsylvania 

 D.C. Civ. Nos. 93-cv-01905 & 93-cv-01906 

 

 Submitted Under 3rd Cir. LAR 34.1(a) 

 January 23, 1995 

 Before: SLOVITER, Chief Judge, 

 LEWIS and ROSENN, Circuit Judges

 (Opinion Filed February 27, 1995) 

Edward A. Olds 

Olds & Innamorato 

Pittsburgh, PA 15223 

 Attorney for Appellants 

K. Kevin Murphy 

Pennsylvania Higher Education 

 Assistance Agency 

Harrisburg, PA 17102 

 Attorney for Appellee 
 

 OPINION OF THE COURT 

 

SLOVITER, Chief Judge. 

 This appeal presents an issue of law: whether interest 

can accrue after the filing of a Chapter 13 bankruptcy petition 

on a nondischargeable student loan. The bankruptcy court held 

that debtors would remain liable for the amount of the postpetition interest that accrued on the unpaid principal of the 

student loan. The district court affirmed. This appeal presents 

what appears to be an issue of first impression for the courts of 

appeals as to which, unfortunately, we have found no helpful 

legislative history. 

I. 

 FACTS AND PROCEDURAL HISTORY

 Appellants Della and Dwight Webster ("the Websters") 

filed a Chapter 13 bankruptcy petition on March 25, 1992.1 Lisa 

and William Leeper ("the Leepers") filed a bankruptcy petition on 

July 28, 1992. Their Chapter 13 plans have been confirmed and 

are currently in place. 

 

 1 Chapter 13 of the Bankruptcy Code sets forth the method by 

which individuals with regular income may adjust their debts 

through bankruptcy. See 11 U.S.C. §§ 1301-1330 (1988 & Supp. II 

1990). A debtor is required to file a plan providing for the 

submission to the trustee of whatever amount of the debtor's 

income is necessary to execute the plan, and to provide for the 

payment of various secured and unsecured claims existing at the 

time of the filing. See 11 U.S.C. §§ 1321-1322. The plan 

submitted by the debtor must be presented for confirmation to the 

bankruptcy court. See 11 U.S.C. § 1325. 
 The Pennsylvania Higher Education Assistance Authority 

("PHEAA") is an unsecured creditor of both the Websters and the 

Leepers. Both the Websters and the Leepers borrowed money from 

PHEAA to attend college under the guaranteed student loan 

program. When the Leepers and the Websters filed for bankruptcy, 

PHEAA filed claims with the bankruptcy court for the principal 

amounts owing on the respective loans at the time of the 

bankruptcy petitions plus all pre-petition interest. Portions of 

the amounts paid pursuant to their two Chapter 13 plans are being 

applied to the PHEAA claims. 

 Neither the Websters nor the Leepers will be able to 

repay their student loan debts in full during the course of their 

Chapter 13 plans. Pursuant to 11 U.S.C. § 1328 (1988 & Supp. II 

1990), which references 11 U.S.C. § 523(a)(8) (1988 & Supp. II 

1990), debts for student loans such as those guaranteed by PHEAA 

are excepted from discharge in Chapter 13 bankruptcy proceedings 

unless they fall within a hardship exception or unless they 

matured seven years before the commencement of the bankruptcy 

case.2 The parties agree that unless one of the two exceptions 

 

 

2 In 1990, Congress amended § 1328 to except debts arising 

under 11 U.S.C. § 523(a)(8) from discharge in a Chapter 13 

bankruptcy. Section 523(a)(8) includes: 

 [A]ny debt . . . for an educational benefit overpayment 

of loan made, insured or guaranteed by a governmental 

unit, or made under any program funded in whole or in 

part by a governmental unit or nonprofit institution, 

or for an obligation to repay funds received as an 

educational benefit, scholarship or stipend, unless-- 

 (A) such loan, benefit, scholarship, or stipend 

overpayment first became due more than 7 years 
applies, PHEAA will be able to collect the balance of the amount 

owing on its bankruptcy claims at the end of the sixty-month 

bankruptcy period for each of the debtors. 

 In addition, PHEAA intends to accrue interest on the 

unpaid principal balance of the loans while the two Chapter 13 

bankruptcy cases are pending and intends to collect that interest 

after the plans are completed. Thus, after their plans were 

confirmed both the Leepers and the Websters (hereafter "the 

debtors") initiated adversary proceedings in the bankruptcy court 

against PHEAA, invoking the bankruptcy court's core jurisdiction 

under 28 U.S.C. § 157 (1988). Each complaint sought an order 

from the bankruptcy court declaring (1) that PHEAA is not 

entitled to accrue post-petition interest during the pendency of 

the Chapter 13 proceedings, and (2) that payments made to PHEAA 

under the Chapter 13 plans be applied only to the principal 

balances of the loans. 

 In its answers to the complaints, PHEAA conceded that 

all plan payments made by the debtors should be applied only to 

their bankruptcy claims, which include the outstanding principal 

balances of the loans and all pre-petition interest. PHEAA 

 

(exclusive of any applicable suspension of the 

repayment period) before the date of the filing of 

the petition; or 

 (B) excepting such debt from discharge under this 

paragraph will impose an undue hardship on the 

debtor and the debtor's dependents; 

 11 U.S.C. § 523(a)(8) (1988 & Supp. II 1990). 
maintained, however, that it is entitled to accrue post-petition 

interest on the unpaid principal balance of the student loan 

debts during the pendency of the Chapter 13 plans. 

 After the two cases were consolidated and the parties 

filed cross-motions for summary judgment, the bankruptcy court 

granted summary judgment in favor of PHEAA. The bankruptcy court 

relied primarily upon Bruning v. United States, 376 U.S. 358 

(1964), in concluding that post-petition interest may accrue on a 

nondischargeable student loan debt during the pendency of a 

Chapter 13 bankruptcy proceeding, although it ordered that all of 

the debtors' payments during the course of the plan should be 

applied to the principal balances and the pre-petition interest. 

The court declined to address the debtors' claim that the accrual 

of post-petition interest would impose an undue hardship on the 

debtors under 11 U.S.C. § 523(a)(8)(B). The court determined 

that the hardship claim would not be ripe for review until the 

debtors have completed all payments under the Chapter 13 plan. 

That determination is not before us in this appeal. 

 The district court entered an order affirming the 

bankruptcy court's decision, essentially adopting the reasoning 

of the bankruptcy court. The debtors appeal. 

 We have jurisdiction over the debtors' appeal pursuant 

to 28 U.S.C. § 158(d) (1988). Because the only issues presented 

in this appeal involve the proper interpretation of the 

Bankruptcy Code, our review is plenary. See In re Roth American, 

Inc., 975 F.2d 949, 952 (3d Cir. 1992); see also In re Abbotts 

Dairies, 788 F.2d 143, 147 (3d Cir. 1986). 
II. 

 DISCUSSION

A. 

 Under the Bankruptcy Code, creditors are not entitled 

to include unmatured (or "post-petition") interest as part of 

their claims in the bankruptcy proceedings. See 11 U.S.C. § 

502(b)(2) (1988); see also Sexton v. Dreyfus, 219 U.S. 339, 344 

(1911) (noting that this rule is derived from a fundamental 

principle of the English bankruptcy system). This longstanding 

rule is designed to assure that no creditor gains an advantage or 

suffers a loss due to the delays inherent in liquidation and 

distribution of the estate. American Iron & Steel Mfg. Co. v. 

Seaboard Air Line Ry., 233 U.S. 261, 266 (1914); see also In re 

Hanna, 872 F.2d 829, 830-31 (8th Cir. 1989). The prohibition 

against claims for post-petition interest generally applies even 

in instances where the claims are based upon underlying debts 

that are not dischargeable. See, e.g., City of New York v. 

Saper, 336 U.S. 328, 337-38 (1949); see also In re JAS 

Enterprises, Inc., 143 B.R. 718, 719 (Bankr. D. Neb. 1992). 

 In Bruning v. United States, 376 U.S. 358 (1964), the 

precedent of most significance for the issue before us, the 

Supreme Court distinguished between denial of post-petition 

interest against the bankruptcy estate on a nondischargeable debt 

and the accrual of interest on a nondischargeable debt during the 

pendency of the bankruptcy to be collected from the debtor after 

the bankruptcy proceeding is completed. Id. at 362-63. In 

Bruning, a taxpayer who had been discharged from bankruptcy 
challenged the IRS's contention that it was entitled to collect 

post-petition interest on a nondischargeable tax debt after the 

conclusion of the taxpayer's bankruptcy. The taxpayer based his 

argument on the traditional rule barring creditors from claiming 

post-petition interest from the bankruptcy estate, a rule now 

codified in 11 U.S.C. § 502(b)(2). The Bruning Court, in a 

unanimous opinion authored by Chief Justice Warren, upheld the 

IRS's position. 

 The Court's reasoning is directly applicable to the 

issue before us. Because Congress made the tax debt 

nondischargeable, it "clearly intended that personal liability 

for unpaid tax debts survive bankruptcy." Bruning, 376 U.S. at 

361. The Court then stated that it did not have any "reason to 

believe that Congress had a different intention with regard to 

personal liability for the interest on such debts." Id. The 

Court reasoned that "[i]n most situations, interest is considered 

to be the cost of the use of the amounts owing a creditor and an 

incentive to prompt repayment and, thus, an integral part of a 

continuing debt." Id. at 360. Thus, the Court concluded, if a 

tax debt was nondischargeable, post-petition interest on that 

debt would also be nondischargeable. Id. at 363. The Court held 

that the policy reasons for denying post-petition interest from 

the bankruptcy estate, which it described as "the avoidance of 

unfairness as between creditors" and "the avoidance of 

administrative inconvenience," were not applicable to an action 

brought against the debtor personally. Id. at 362-63. 
 While Bruning was decided prior to the enactment of the 

Bankruptcy Code, it has been applied by other courts of appeals 

to cases arising under the Code. See Burns v. United States (In 

re Burns, 887 F.2d 1541, 1543 (11th Cir. 1989) (specifically 

addressing the issue of whether the Bruning holding survived the 

enactment of the Bankruptcy Code of 1978 and answering 

affirmatively); In re Hanna, 872 F.2d at 830-31 (same); see also

Bradley v. United States, 936 F.2d 707, 709-10 n.3 (2d Cir. 1991) 

(declining to reach the issue, but acknowledging that "the weight 

of authority" permits accrual of interest on nondischargeable tax 

debts during a bankruptcy); Paulson v. United States (In re 

Paulson), 152 B.R. 46, 49-51 (Bankr. W.D. Pa. 1992) (concluding 

that the Bruning rule applies to actions arising under the 

Bankruptcy Code). 

 In addition, while Bruning involved the accrual of 

post-petition interest on a nondischargeable tax debt, its 

reasoning has been applied to other types of nondischargeable 

debts. See In re Fullmer, 962 F.2d 1463, 1468 (10th Cir. 1992) 

(applying Bruning to post-petition interest on a nondischargeable 

tax penalty); In re Burns, 887 F.2d at 1543 (same); In re Brace, 

131 B.R. 612, 613-14 (Bankr. W.D. Mich. 1991) (holding that postpetition interest may accrue on a debt that was nondischargeable 

under 11 U.S.C. § 532(a)(2) because it arose from fraudulent 

misrepresentations); In re Kellar, 125 B.R. 716, 720-21 (Bankr. 

N.D.N.Y. 1989) (same). 

 The Bruning decision therefore stands for the general 

proposition that creditors may accrue as to the debtor personally 
post-petition interest on nondischargeable debts while a 

bankruptcy is pending. The bankruptcy court and the district 

court relied primarily upon this proposition in granting and 

affirming summary judgment in favor of PHEAA in this case. But 

while courts have applied the Bruning rule to permit accrual of 

interest on nondischargeable debts, no court of appeal has 

specifically applied the rule in the Chapter 13 context. In this 

case, the debtors argue that Bruning is inapplicable to Chapter 

13 bankruptcies and to student loans in particular. 

B. 

 The debtors contend that it is unfair to apply Bruning

to Chapter 13 debtors because a Chapter 13 bankruptcy plan cannot 

make any provision for the payment of the post-petition interest 

that accrues on a nondischargeable debt. The debtors fail to 

explain why this problem distinguishes Chapter 13 from Chapter 7 

or Chapter 11. In all situations where the Bruning rule is 

applicable, the bankruptcy plan cannot make allowances for postpetition interest; the interest merely accrues and is collectable 

against the debtor after the bankruptcy is completed. Thus, the 

debtors' effort to distinguish Chapter 13 cases on this ground is 

unpersuasive. 

 The debtors argue that we should follow the authority 

of the New Mexico bankruptcy court in In re Wasson, 152 B.R. 639 

(Bankr. D. N.M. 1993), that rejected a creditor's objection to 

the confirmation of a debtor's Chapter 13 plan that failed to 

provide for post-petition interest on a nondischargeable student 

loan. Id. at 642. Notwithstanding the fact that the Wasson
court explicitly limited its holding disallowing the claim for 

post-petition interest on the nondischargeable student loan to 

instances where the underlying debt was paid in full from the 

bankruptcy estate, id. at 642, the debtors rely on Wasson for the 

general principle that Bruning is inapplicable to Chapter 13 

cases. 

 The result in Wasson has been expressly disapproved in 

In re Shelbayah, 165 B.R. 332, 337 (Bankr. N.D. Ga. 1994), and 

Branch v. UNIPAC/NEBHELP (Matter of Branch), 175 B.R. 732 (Bankr. 

D. Neb. 1994), both of which held that post-petition interest may 

accrue on a nondischargeable student loan during the debtor's 

Chapter 13 bankruptcy. In Shelbayah, the debtor had conceded 

that the creditor could file a claim for the principal plus all 

pre-petition interest, but objected to the inclusion of the postpetition interest in the claim. The debtor argued that the 

creditor was barred from filing a claim for post-petition 

interest by 11 U.S.C. § 502(b)(2), and, further, that such 

interest was dischargeable pursuant to 11 U.S.C. § 1328(a) (1988 

& Supp. II 1990), which permits discharge of all debts 

"disallowed under section 502." Shelbayah, 165 B.R. at 334. 

 The Shelbayah court, applying the analysis of Bruning, 

held that while the creditor was barred from claiming the postpetition interest in the bankruptcy proceeding, such postpetition interest could accrue during the course of the 

bankruptcy and would not be dischargeable. Id. at 337. The 

court noted that "[a]lmost all courts that have considered the 

issue presented have concluded that the disallowance of 
postpetition interest has no effect on the dischargeability of a 

claim for, and an individual's future liability for, such 

interest." Id. at 335 (citing, inter alia, Bruning, 376 U.S. 358 

(1964)). The Shelbayah court acknowledged that the Wasson

decision reached a contrary result, but concluded that the Wasson

court's reasoning was based on a decision that "confus[ed] the 

disallowance of unmatured interest with the non-accrual of 

interest." Shelbayah, 165 B.R. at 337. The court held that 

while section 502(b)(2) bars claims for unmatured interest 

against the bankruptcy estate, it should not preclude the accrual 

of interest on nondischargeable claims against the debtor. Id.

 Even more recently, the bankruptcy court in Branch held 

that post-petition interest may accrue on a nondischargeable 

student loan and is nondischargeable, therefore remaining an 

obligation of the debtor after the bankruptcy case is completed. 

Matter of Branch, 175 B.R. at 734-35. Branch rejects the Wasson

analysis as "contrary to the logic of [In re Hanna], the 

authority in [the Eighth] circuit." Id. at 734. In re Hanna

followed Bruning and held that a debtor remains personally liable 

for post-petition interest on a nondischargeable tax debt after 

bankruptcy proceedings are completed. See 872 F.2d at 831. We 

agree that the Wasson decision failed to distinguish properly 

between a claim for unmatured interest and the accrual of postpetition interest on a nondischargeable debt, and that the 

discharge of post-petition interest on nondischargeable debts was 

clearly inconsistent with the mandate of Bruning. 
 With the exception of Wasson, every court that has 

addressed the issue has determined that interest may accrue on 

nondischargeable student loans during the pendency of a Chapter 

13 bankruptcy plan. See Jordan v. Colorado Student Loan Program

(In re Jordan), 146 B.R. 31, 32-33 (D. Colo. 1992) (affirming 

denial of debtor's motion to confirm a Chapter 13 plan based on 

creditor's objection that the plan improperly provided that 

interest on the debtor's non-dischargeable student loans would be 

tolled while the bankruptcy was pending); Ridder v. Great Lakes 

Higher Educ. Corp. (In re Ridder), 171 B.R. 345, 346-47 (Bankr. 

W.D. Wis. 1994) (post-petition interest on a nondischargeable 

student loan may be collected after bankruptcy concluded); see

also In re Crable, 174 B.R. 62, 63 (Bankr. W.D. Ky. 1994) 

(permitting accrual of post-petition interest on nondischargeable 

debt for child support during pendency of Chapter 13 proceeding 

and noting that cases involving student loans are analogous). 

 It remains to be considered whether there is any 

validity to the debtors' argument that the bankruptcy court 

improperly created two classes of debtors in Chapter 13 cases 

involving nondischargeable student loans. The debtors base this 

argument on the bankruptcy court's acceptance of the premise in 

Wasson that debtors who will completely satisfy their student 

loan obligations during the course of the Chapter 13 plan will 

have no obligation to pay any post-petition interest,3 whereas 

 

 

3 In In re Christian, 25 B.R. 438, 438-39 (Bankr. D. N.M. 

1982), the New Mexico bankruptcy court had held that the Bruning

rule did not apply to a tax debt which was fully paid out of the 

estate. Wasson followed Christian and reasoned that "[a]s 
those who, like themselves, will not have satisfied all of their 

loan obligations during the course of the Chapter 13 proceeding 

will be obligated to pay post-petition interest on the loans. 

The debtors then reason that because there is no statutory basis 

for such a distinction, this court should extend the Wasson

reasoning to bar the accrual and collection of all post-petition 

interest on all nondischargeable student loans in Chapter 13 

cases, whether or not the debt was paid in full during the 

bankruptcy. 

 The premise of the debtors' "two class" argument is 

that no post-petition interest accrues when a nondischargeable 

debt is fully paid out of the estate in the course of the 

bankruptcy proceeding. The difficulty with the debtors' argument 

is that this court has already held that the Bruning reasoning 

applies even in instances where the debt is paid in full. In 

Hugh H. Eby Co. v. United States, 456 F.2d 923 (3d Cir. 1972), a 

taxpayer in a pre-Code case where the underlying debt was paid in 

full argued that it was entitled to recovery of post-petition 

interest on taxes that it had paid. The taxpayer sought to 

distinguish Bruning, which would have permitted the interest to 

accrue, on the ground that in Bruning the taxes had not been paid 

in full out of the estate. Id. at 925. The taxpayer also argued 

 

Bruning does not apply to cases in which tax debts are fully paid 

out of the estate, it logically follows that Bruning should not 

apply to student loan debts which are fully paid out of the 

estate." In re Wasson, 152 B.R. 639, 642 (Bankr. D. N.M. 1993). 
in Eby that because only liability for post-petition, preconfirmation interest was at issue, Bruning was inapplicable. 

 We rejected both distinctions. We stated: "[I]n 

Bruning, the Supreme Court held that all post-petition interest, 

including interest accrued during the pendency of the bankruptcy 

proceeding, could be collected by the Government from afteracquired assets of the debtor. A fortiori, post-petition, preconfirmation interest is also collectible." Id. We then stated, 

in language of particular relevance here, "That the underlying 

taxes were later paid in full here does not affect the fact that 

appellant had the use of the Government's money during the 

pendency of the reorganization proceeding, and that since the 

underlying debt is not discharged . . . neither is the interest 

which accrues by reason of the use of such money during the 

pendency of the proceedings." Id.; see also United States v. 

River Coal Co., Inc., 748 F.2d 1103, 1107 (6th Cir. 1984) 

(holding that the Bruning rule applied "regardless of whether the 

underlying debt has been paid or not"). 

 Eby is good precedent. We cannot distinguish it, even 

if we were so inclined, on the ground that it is a pre-Code case 

because as we noted earlier, Bruning has been held as equally 

applicable to cases under the Bankruptcy Code. It follows from 

our construction of Bruning in Eby that even if the 

nondischargeable debt has been paid in full by the bankruptcy 

estate, accrual of post-petition interest is not precluded. 

Therefore the two-class problem identified by the debtors is 

eliminated. 
C. 

 Finally, the debtors argue that Bruning has been 

overruled by the automatic stay provision of the Bankruptcy Code. 

See 11 U.S.C. § 362(a) (1988). Relying on cases suggesting that 

the automatic stay provision of the Bankruptcy Code should be 

broadly construed, the debtors contend that the accrual of 

interest against them while a bankruptcy is pending violates the 

stay. They reason that insofar as Bruning permitted such accrual 

prior to the enactment of the Code, it is no longer valid. 

 The debtors' argument here rests on the dubious 

assertion that the act of charging interest on a nondischargeable 

claim is essentially an act to "collect" a debt. See Appellant's 

Brief at 24. Because the automatic stay provision bars the 

collection of any debts from the debtor while a bankruptcy is 

pending, see 11 U.S.C. §§ 362(a)(6), the debtors reason that 

charging interest must necessarily be barred. 

 As the debtors acknowledge, none of the cases applying 

Bruning to post-Code bankruptcy cases has addressed the effect of 

the automatic stay provision on the accrual of post-petition 

interest. Indeed, those cases permit the accrual of such 

interest with no mention of the automatic stay provision. 

Moreover, as PHEAA notes, the cases cited by the debtors do not 

support the debtors' theory. Instead, those cases only support 

the propositions that the enforcement of a judicial lien, see, 

e.g., In re Miller, 98 B.R. 110, 113-14 (Bankr. N.D. Ga. 1989), 

and the garnishment of wages, see, e.g., In re Hulvey, 102 B.R. 

703, 704-05 (Bankr. C.D. Ill. 1988), after the filing of a 
bankruptcy proceeding violate the automatic stay. The actions in 

those cases, which involve affirmative efforts by the creditor to 

collect from the debtor, differ significantly from the mere 

accrual of interest, which requires a wholly separate action for 

collection. 

 In light of the lack of support for the debtors' theory 

in either the Code or caselaw, and in light of the continued 

viability of Bruning in bankruptcy cases arising under the Code, 

see Burns, 887 F.2d at 1543, we decline to hold that the 

automatic stay provision of the Bankruptcy Code overruled 

Bruning. We conclude that the mere accrual of post-petition 

interest does not violate the automatic stay. 

D. 

 We are not unaware that the result in this case may be 

viewed as harsh by student debtors saddled with the mounting 

costs of higher education. In this case the Websters listed the 

claim of PHEAA as totalling a combined $34,302.74 on their 

bankruptcy schedules. The Leepers listed the claim of PHEAA as 

totalling a combined $18,542.26 on their bankruptcy schedules. 

During the Websters' Chapter 13 plan, PHEAA will accrue almost 

$15,000 in interest on the Websters' debt. During the Leepers' 

Chapter 13 plan, PHEAA will accrue almost $8,000 in interest on 

the Leepers' debt. As a result, both the Leepers and the 

Websters will emerge from bankruptcy owing PHEAA more money than 

was owed to PHEAA at the time of their bankruptcy petitions. 

 However, whether Bruning should be applied to permit 

post-petition interest to accrue on nondischargeable student 
loans is a political decision. Congress, which created the 

student loan program and which then decided for policy reasons to 

make debts arising from those loans nondischargeable (presumably 

with the knowledge that under Bruning post-petition interest 

would then also be nondischargeable) may choose to amend the 

statute with respect to the treatment of post-petition interest. 

But until and unless it does so, we see no basis for the courts 

to change the longstanding rule as to nondischargeability of 

post-petition interest. 

 Congress did provide for amelioration of the effect of 

nondischargeability in appropriate circumstances by authorizing 

the bankruptcy court to discharge the remainder of a debt for a 

student loan if, inter alia, the debt "will impose an undue 

hardship on the debtor and the debtor's dependents." 11 U.S.C. § 

523(a)(8)(B) (1988); see note 2 supra. On this appeal, we have 

no occasion to determine whether the debtors status at the close 

of bankruptcy will be sufficient to support a finding of "undue 

hardship." Undoubtedly, the amount of post-petition interest 

that will have accrued on the loans is a factor that the 

bankruptcy court will consider in making its "undue hardship" 

determination. 
III. 

 CONCLUSION

 For the foregoing reasons, we conclude that the 

bankruptcy court did not err in ruling that PHEAA is entitled to 

accrue interest on the nondischargeable student loans during the 

pendency of the debtors' Chapter 13 bankruptcies. We therefore 

will affirm the order of the district court.