Copyright (c) 2004 Temple University of the Commonwealth System of Higher Education
Temple Law Review
COMMENT: THE PARTIAL DISCHARGE OF STUDENT LOANS: BREAKING APART THE ALL OR NOTHING INTERPRETATION OF 11 U.S.C. 523(A)(8)
77 Temp. L. Rev. 71
Student loans are among the easiest loans to obtain and the most difficult to discharge. 1 In the past three decades, Congress has loosened requirements for obtaining student loans. 2 At the same time, Congress made educational loans nondischargeable unless the debtor proves "undue hardship." 3 The relative ease of obtaining student loans has caused increased tuition prices and greater defaults in repayment, paving the way to a student debt crisis. 4 On the front lines of this crisis, bankruptcy courts have faced formidable difficulties in determining when the individual debtor proves an "undue hardship" exception to nondischargeability under 523(a)(8) of the Bankruptcy Code. 5
The main problem is Congress did not define "undue hardship." 6 Nor did Congress specifically provide that a debtor could discharge a portion of the educational debt if the debtor establishes some level of hardship. This absence of explicit legislative direction has given rise to inconsistent application and protracted litigation of the 523(a)(8) "undue hardship" exception. 7
More specifically, courts are split on whether a partial discharge of educational debt is permissible under 523(a)(8). 8 At one end of the spectrum, some courts maintain that the plain language of 523(a)(8) precludes a partial discharge. 9 Drawing on the absence of language in 523(a) authorizing a partial discharge, courts in this camp have ruled that the educational "debt" is either wholly dischargeable or non-dischargeable. 10 At the other end of the spectrum, ...
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