Discharging student loan debt under the United States Bankruptcy Code (the “Bankruptcy Code”) is more difficult than attempting to discharge other types of debt. Although discharging student loan debt is not a simple hurdle to surpass, it is possible in certain circumstances. Under the Bankruptcy Code, student loan debt may not be discharged “unless excepting such debt from discharge . . . would impose an undue hardship on the debtor and the debtor's dependents . . . .” The Bankruptcy Code does not define undue hardship. Congress “left it up to the various Bankruptcy Courts to utilize their discretion in defining what that term means after an analysis of the statute and a review of applicable legislative history.” This created an imbalance between the circuits, and courts have implemented a variety of tests throughout the years to decide undue hardship cases. Presently, all student loans are subject to the undue hardship standard, and the two main tests applied by the courts are the Brunner test and the totality of the circumstances test.
Because the undue hardship standard was enacted without guidance on how to evaluate it, two questions arise: (1) whether it is possible to discharge student loan debt, and (2) how have courts applied the differing standards in determining whether to discharge student loan debt? This memorandum will examine the two undue hardship standards. Part I discusses both the Brunner test and totality of the circumstances test. Part II assesses how the standards compare to each other.