Education loan Discharge: Reevaluating Undue Hardship under a Presumption of Consistent Usage
Ashley M. Bykerk * Notes & Comments Editor, Emory Bankruptcy Developments Journal; J.D. Candidate, Emory University School of Law (2019); B.A., with a high difference, Nebraska Wesleyan University (2016). First, i would really like to thank my faculty consultant, Professor Rafael Pardo, for their priceless help in developing my remark. I might additionally choose to thank the employees users and editors associated with Emory Bankruptcy Developments Journal with regards to their diligent work with planning my Comment for publication. Finally, I wish to thank my children and buddies due to their endless support.
An number that is increasing of are susceptible to monetary stress due to academic financial obligation. Several of those people look for respite from that stress through the bankruptcy system, where they need to establish that repaying their academic financial obligation would impose an undue difficulty in purchase to acquire a release of these financial obligation. The main focus for this Comment is § 523(a)(8) of this U.S. Bankruptcy Code, which sets forth academic debt as a exclusion to bankruptcy release unless the payment of education loan responsibilities imposes an “undue difficulty. ” In drafting this area, Congress failed to determine the expression “undue hardship, ” thus empowering the courts to ascertain just exactly what comprises undue difficulty and the circumstances that deserve forgiveness of academic financial obligation. As being result, courts are suffering from many different tests to present a framework for determining whether a financial obligation should really be dischargeable.
Congress’s decision to shape the relief of academic loans from the application of the obscure and standard that is indeterminate turned out to be difficult for different reasons. One solution, not yet talked about by courts and commentators, would be to aim to other federal statutes and laws implementing the undue difficulty standard to guage the use of the standard and consider exactly how those applications can notify the undue difficulty analysis into the bankruptcy context.
This comment supports the conclusion that the primary inquiry into a debtor’s undue hardship claim must focus on the debtor’s current financial circumstances without undue regard to pre-bankruptcy conduct or assurance of persisting financial distress by evaluating the undue hardship standard in the context of public benefits, employment discrimination, financial aid eligibility, tax payment extensions, and discovery in civil procedure. Any meaning Congress provides to “undue difficulty” in § 523(a)(8) associated with the Bankruptcy Code ought to include factors that assess the livelihood that is future of debtor if she actually is rejected bankruptcy relief in line with the debtor’s present monetary circumstances.
Education loan debt in america happens to be for a frequent increase becoming the next consumer debt category that is highest with additional than forty-four million borrowers keeping over one. 5 trillion dollars in student loan financial obligation. 1 Zack Friedman, Have student education loans Caused A Drop In Home Ownership? , F orbes, https: //www. Forbes.com/sites/zackfriedman/2019/01/18/student-loans-home-ownership/8d2596c3d22 (Jan. 18, 2019, 8:32 AM). This figure represents significantly more than two. 5 times the quantity of education loan debt owed just ten years earlier in the day. 2 Anthony Cilluffo, 5 factual statements about student education loans, Pew analysis Center (Aug. 24, 2017), http: //www. Pewresearch.org/fact-tank/2017/08/24/5-facts-about-student-loans/. They are the data driving the literature explaining the education loan financial obligation crisis, an emergency driven by increasing tuition prices that exceed pupil economic a 3 Danielle Douglas-Gabriel, university expenses increasing quicker than Financial A Washington Post (Oct. 26, 2016), https: //www. Washingtonpost.com/news/grade-point/wp/2016/10/26/college-costs-rising-faster-than-financial-a Educational loan borrowers have increasingly discovered on their own struggling to repay their figuratively speaking as suggested by education loan standard prices, leading to unwanted effects to an indiv 4 news release, U.S. Department of Education Releases National scholar Loan FY 2014 Cohort Default Rate (Sept. 27, 2017); see additionally William Elliott & Melinda Lewis, Student Debt Results on Financial Well-Being: Research and Policy Implications, 29 J. Econ. Survs. 614, 624 (2015).
This comment views bankruptcy as one solution to the financial distress that students with burdensome student loans face because of the policy objectives driving bankruptcy law while there are many potential solutions to the rising costs of tuition and https://speedyloan.net/installment-loans-ia resulting dependency on student loans. Bankruptcy legislation is really a mechanism that is statutory indiv 5 Robert B. Milligan, placing a conclusion to Judicial Lawmaking: Abolishing the Undue Hardship Exception for figuratively speaking in Bankruptcy, 34 U.C. Davis L. Rev. 221, 224 (2000). Two main public policy goals govern the reason behind bankruptcy legislation. First, bankruptcy prov 6 See id. At 225. 2nd, debtors get rest from creditors and acquire a new monetary begin that is unburdened because of the stress and battles of onerous pre-existing debts. 7 Id. At 225–26.
The focus of my remark is § 523(a)(8) for the U.S. Bankruptcy Code, which determines a debtor’s power to discharge education loan financial obligation in the event that payment of student loan responsibilities imposes an “undue hardship. ” 8 11 U.S.C. § 523(a)(8) (2018). My Comment examines the effect of Congress’s choice to delegate the job of interpreting the undue difficulty exclusion towards the judiciary and argues that the statutory interpretation device of constant use provides a viable opportinity for reinterpreting the expression “undue hardship” to create a frequent and reasonable standard to simply help courts see whether students debtor’s situation comprises undue difficulty that necessitates release regarding the academic debt. My research involves investigating relevant federal statutes and regulations to ascertain how a expression “undue hardship” is interpreted and applied to find out whether that definition and application can notify courts as to how the conventional works extremely well when you look at the context of education loan release proceedings to produce constant remedy for student-loan debtors.
First, this Comment provides history from the development of education loan programs together with bankruptcy system. Next, this Comment supplies the legal doctrine behind tools of statutory construction, like the presumption of constant usage, that i take advantage of to guide the idea of looking across federal regulations to discern typical threads one of the method undue difficulty is interpreted and applied to simply help notify making use of the conventional within the bankruptcy context. My Comment then analyzes the different federal conditions utilizing the undue difficulty standard by describing the conditions, analyzing situation legislation choices interpreting the conventional, and discerning tips which can be used to tell the usage of the conventional in determining whether student education loans could be released in bankruptcy. Finally, this Comment proposes some essential policy factors that offer the idea that the undue difficulty standard into the bankruptcy context should be reevaluated by circuit courts which are constantly up against your decision of just what constitutes an undue difficulty to justify the release of education loan financial obligation.