Opinion ID: 76245
Heading Depth: 2
Heading Rank: 1

Heading: The Brunner test of undue hardship.

Text: 10 Although § 523(a)(8) clearly requires a showing of undue hardship, for discharge of student loan indebtedness in bankruptcy proceedings, the code neglects to define the term. As a result, [b]ankruptcy courts use a wide variety of tests to determine whether the debtor has demonstrated undue hardship. While these tests have received varying degrees of acceptance, no particular test authoritatively guides or governs the undue hardship determination. In re: Faish, 72 F.3d 298, 302 (3d Cir.1995) (alteration in original) (internal quotation marks omitted). This court has yet to address the appropriate factors to be considered in determining when a debtor has shown undue hardship. Several of our sister circuits have addressed this issue, however, and adopted the test set forth by the Second Circuit in Brunner. See In re Ekenasi, 325 F.3d 541, 546-50 (4th Cir.2003); In re Brightful, 267 F.3d 324, 327-28 (3d Cir.2001); In re Rifino, 245 F.3d 1083, 1087-88 (9th Cir. 2001); In re Roberson, 999 F.2d 1132, 1135-37 (7th Cir.1993). But see In re Long, 322 F.3d 549, 553 (8th Cir.2003) (applying the totality-of-the-circumstances test); In re Hornsby, 144 F.3d 433, 437 (6th Cir.1998) ([d]eclining to adopt any one test). As we find the reasoning of the majority of our sister circuits persuasive, we now hold that the Brunner test is the appropriate test for determining undue hardship. 11 The Brunner court adopted the following three-part test for the undue hardship exception to § 523(a)(8): 12 [to establish undue hardship, the debtor must show] (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 of the student loans; and (3) that the debtor has made good faith efforts to repay the loans. 13 831 F.2d at 396. 14 Cox claims the 1998 amendments to the statute, removing the only alternative method of discharging student loans and leaving undue hardship as the sole avenue for relief, rendered the Brunner test inappropriate because the Brunner test now produces harsh, and sometimes absurd, results. We disagree. As the Seventh Circuit recognized in In re Roberson, 15 The government is not twisting the arms of potential students. The decision of whether or not to borrow for a college education lies with the individual; absent an expression to the contrary, the government does not guarantee the student's future financial success. If the leveraged investment of an education does not generate the return the borrower anticipated, the student, not the taxpayers, must accept the consequences of the decision to borrow. 16 999 F.2d at 1137. Congress's intent to make it harder for a student to shift his debt responsibility onto the taxpayer is clear from the 1998 amendments. Moreover, the Brunner test leaves an avenue of relief and is an effective tool for identifying those debtors whose earning potential and circumstances make it unlikely that they will produce the means necessary to repay the student loans while maintaining a minimal standard of living. This situation, in essence, is what constitutes an undue hardship — not the mere inability to pay, but an inability to pay that is likely to continue for a significant time. The Brunner test is an effective tool in analyzing that potential. 17