School Loans and Bankruptcy Discharge

Proponents of relief for student loan borrowers in bankruptcy had reason to cheer this month in both Washington and Oregon. Student loan obligations are presumptively non-dischargeable in bankruptcy absent a showing of “undue hardship.” 11 U.S.C. § 523(a)(8). To determine if a debtor has shown undue hardship, courts follow the three-part test from Brunner. See In re Pena, 155 F.3d at 1111–12. Under Brunner, the debtor must prove that: (1) he cannot maintain, based on current income and
expenses, a “minimal” standard of living for himself and his dependents if required to repay the loans; (2) additional cir