Education loan Discharge: Reevaluating Hardship that is undue under 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’d like to thank my faculty advisor, Professor Rafael Pardo, for their assistance that is invaluable in my Comment. I might additionally prefer to thank the employees people and editors regarding the Emory Bankruptcy Developments Journal with their work that is diligent in my Comment for publication. Finally, i’d like to thank my children and buddies with their endless help.
An increasing quantity of Us americans are susceptible to economic stress due to academic financial obligation. Some of these people seek rest from that stress through the bankruptcy system, where they need to establish that repaying their academic financial obligation would impose a hardship that is undue purchase to get a release of these financial obligation. The main focus with this Comment is § 523(a)(8) associated with the U.S. Bankruptcy Code, which sets forth academic financial obligation being a exclusion to bankruptcy discharge unless the payment of education loan responsibilities imposes an “undue difficulty. ” In drafting this part, Congress failed to determine the expression “undue hardship, ” thus empowering the courts to ascertain just what constitutes hardship that is undue the circumstances that deserve forgiveness of academic financial obligation. As a total outcome, courts are suffering from a variety of tests to offer a framework for determining whether a debt must be dischargeable.
Congress’s choice to shape the relief of educational loans from the application of the obscure and indeterminate standard has turned out to be difficult for different reasons. One solution, maybe maybe not yet discussed by courts and commentators, is always to turn to other federal statutes and laws implementing the undue hardship standard to guage the application of the standard and consider just just how those applications can notify the online installment loans id 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) regarding 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 economic circumstances.
Education loan financial obligation in america is for a consistent increase becoming the 2nd greatest personal debt category with additional than forty-four million borrowers keeping over one. 5 trillion bucks in education loan financial obligation. 1 Zack Friedman, Have figuratively speaking 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 have always been). This figure represents significantly more than two. 5 times the total amount of education loan debt owed just ten years earlier in the day. 2 Anthony Cilluffo, 5 factual statements about figuratively speaking, 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 literary works explaining the education loan debt crisis, an emergency driven by rising tuition prices that exceed pupil economic a 3 Danielle Douglas-Gabriel, university costs faster that is rising 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 actually increasingly discovered on their own struggling to repay their student education loans as suggested by education loan standard rates, leading to adverse effects to an indiv 4 news release, U.S. Department of Education Releases National scholar Loan FY 2014 Cohort Default speed (Sept. 27, 2017); see additionally William Elliott & Melinda Lewis, Student Debt Impacts 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 resulting dependency on student loans. Bankruptcy legislation is just a mechanism that is statutory indiv 5 Robert B. Milligan, Putting 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 point behind bankruptcy legislation. First, bankruptcy prov 6 identify id. At 225. 2nd, debtors receive respite from creditors and acquire a brand new economic begin that is unburdened by the stress and battles of onerous pre-existing debts. 7 Id. At 225–26.
The main 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 difficulty. ” 8 11 U.S.C. § 523(a)(8) (2018). My Comment examines the effect of Congress’s decision to delegate the duty of interpreting the undue difficulty exclusion to your judiciary and contends that the statutory interpretation device of constant use offers a viable opportinity for reinterpreting the expression “undue hardship” to create a frequent and reasonable standard to assist courts see whether students debtor’s circumstance comprises undue difficulty that necessitates discharge associated with academic financial obligation. My research involves investigating relevant federal statutes and laws to find out the way the phrase “undue hardship” is interpreted and used to find out whether that meaning and application can notify courts on what the typical can be utilized within the context of education loan release procedures to produce treatment that is consistent of debtors.
First, this Comment provides history in the development of student loan programs together with bankruptcy system. Next, this Comment gives the doctrine that is legal tools of statutory construction, like the presumption of constant use, that I prefer to aid the thought of searching across federal rules to discern typical threads on the list of method undue difficulty is interpreted and applied to greatly help notify the usage of the conventional within the bankruptcy context. My Comment then analyzes the many federal conditions making use of the hardship that is undue by explaining the conditions, analyzing instance legislation choices interpreting the typical, and discerning key points which can be used to share with making use of the standard in determining whether student education loans could be released in bankruptcy. Finally, this Comment proposes some crucial policy factors that offer the idea that the undue difficulty standard into the bankruptcy context should be reevaluated by circuit courts which can be constantly up against your choice of exactly just what comprises an undue hardship to warrant the release of education loan financial obligation.