Opinion ID: 710042
Heading Depth: 3
Heading Rank: 3

Heading: The Brunner Test

Text: 48 As the Court of Appeals for the Second Circuit has observed, before Brunner was decided there was very little appellate authority on the definition of 'undue hardship' in the context of 11 U.S.C. Sec. 523(a)(8)(B). Brunner, 831 F.2d at 396. Relying upon the reasoning of the district court below, 3 the Brunner court set forth the following three-part test for the undue hardship exception: 49 (1) that the debtor cannot maintain, based on current income and expenses, a minimal standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period for student loans; and (3) that the debtor has made good faith efforts to repay the loans. 50 Id. 51 The Court of Appeals for the Seventh Circuit formally adopted the Brunner test in In re Roberson, 999 F.2d at 1132. In Roberson, both the bankruptcy court and the district court below had applied the three-part Johnson test. After expressly rejecting the Johnson test and giving the Brunner test its imprimatur, the Seventh Circuit described how the Brunner test should properly be applied. 52 The Roberson court observed that [t]he first prong of Brunner requires an examination of the debtor's current financial condition to see if payment of the loans would cause his standard of living to fall below that minimally necessary. Id. at 1135. The court admonished that the other prongs of the Brunner test should not be examined if the first prong has not been satisfied. Id. 53 The second prong of the Brunner test requires that 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. Brunner, 831 F.2d at 396. The Roberson court observed that this requirement properly recognizes the potential continuing benefit of an education, and imputes to the meaning of 'undue hardship' a requirement that the debtor show his dire financial condition is likely to exist for a significant portion of the repayment period. Roberson, 999 F.2d at 1135. 54 The third prong of the Brunner test is the good faith inquiry. The Roberson court noted that the question of good faith should only be reached if the debtor has satisfied the first two elements. See id. at 1136. The good faith inquiry is to be guided by the understanding that undue hardship encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from 'factors beyond his reasonable control.'  Id. (quoting Comm'n on the Bankruptcy Laws of the United States, Report, [H.R.Doc. No. 137, 93d Congress, 1st Sess., Pt. II], at 140 n. 16). 55 The Roberson court rejected the second prong of the Johnson policy test, which considers whether the debtor 'has definitely benefitted financially from the education which the loan helped to finance.'  Id. at 1136 (quoting Johnson, 5 Bankr.Ct.Dec. at 544). The court observed that [s]uch an inquiry conflicts with the basic concept of government-backed student loans. Roberson, 999 F.2d at 1136. 56 The Seventh Circuit cited the Southern District of New York's statement in Brunner that federal student loan programs were not designed to turn[ ] the government into an insurer of educational value. Id. (quoting Brunner, 46 B.R. 752, 756 n. 3 (S.D.N.Y.1985)). Students who benefit from guaranteed loan programs normally would not be eligible to receive any financing or only financing at a higher rate of interest.... Roberson, 999 F.2d at 1136. Since [t]he decision of whether or not to borrow for a college education lies with the individual, it is the student, not the taxpayers, [that] must accept the consequences of the decision to borrow. Id. at 1137. 57 We agree with the Seventh Circuit's analysis and we offer another criticism of the Johnson test. Johnson is needlessly verbose and multifaceted. Its multiple tests and the subsidiary questions required to be answered thereunder do not provide the required clear statement of what the law is. For these reasons, we decline to adopt the Johnson undue hardship test as the law of this Circuit.