January 24, 2020

Discharging Student Loans in Bankruptcy: A Law Review Article

Contents

Introduction

I filed bankruptcy in 1992. Student loans were a principal issue. I litigated that issue for the next eleven years. During those years, despite an extraordinarily hostile judicial attitude toward student loan discharge, I won repeated appeals of palpably biased and legally unjustified trial court rulings. Unfortunately, we did not yet have a $1.6 trillion student loan debt crisis, so I was unable to persuade the U.S. Supreme Court that these problems in the courts needed to be corrected.

During those years, I accumulated a great deal of knowledge and information about various court cases dealing with the discharge of student loans in bankruptcy. In 1998, I published a law review article that laid out the history and the arguments on such discharge. Another post summarizes some of the main points, under the heading “I Tried to Tell Them.” This post provides the full text of the the law review article.

This article is more than 20 years old at this point, and thus should not be relied upon for insight into the current legal environment. That said, it quickly becomes clear, from perusal of relevant webpages (e.g., Nolo Press, CreditKarma, Student Loan Borrower Assistance), that some of the same misbegotten legal precedents continue to this day to confuse judicial thinking. The elimination of student loan debt, even for extreme cases, continues to be beyond the imagination of many judges.

Arguments presented in this article might still be useful to influence policy and/or litigation. But probably the more realistic assessment is that this article serves, as a historical matter, to illustrate the substantial uselessness — indeed, the profoundly counterproductive effects — of the American civil court system, for purposes of identifying and resolving problems of interest to people who are not rich, before those problems blossom into full-blown national crises.

As expressed in my comment to an article in The American Conservative,

The real problem was that courts seized upon the law’s “undue hardship” language as an opportunity to moralize. One common formulation was that “undue hardship” did not exist unless repayment would deprive the student debtor of all that makes life worth living. There was no legal foundation for this interpretation. The judges just made it up. They had been young people who became lawyers and made lots of money. They couldn’t understand why everyone didn’t just follow their example. …

We have a $1.6 trillion student loan problem because, among Americans of any age who have ever taken out a student loan, hardly any have been able to discharge loans in bankruptcy. That removed a brake upon the system, a red flag that certain schools or fields of study were not profitable. …

For many years, now, the purpose of the student borrower has been to serve as a conduit by which federal dollars could flow from the government to the universities. The banks and universities get the money; the kid who takes out the loans bears the responsibility.

Nobody wanted to think about a young person’s education as an investment in America’s future. That sounded like a gift. How dare anyone get a free education if we can bill them for it? It sounds like they might be getting something that we aren’t! Unacceptable.

So we put the eagle eye on the student borrower. We made sure that the universities and the banks got every cent they felt they deserved, including some they definitely didn’t. This wouldn’t be the last time our great nation displayed such priorities.

We weren’t quite so much on the ball when it came to asking whether that young person got his/her money’s worth. That wasn’t really our concern. To the contrary, we just wanted the accounts to be square, so that everyone could rest assured we hadn’t given that kid a dime.

So now we have $1.6 trillion worth of accumulated attention to every possible cent that the students of America might have been charged for, in the name of higher education. Very good. But at some point, a person with a brain might ask whether this was really the most sensible way to approach the matter. Hence my law review article.

Page Images

In this section, the article is presented as individual page images. To enlarge the view of all pages (at least on Windows computers), use Ctrl-+ (i.e., hold down the Ctrl key and hit the plus key). To view a single page, enlarged, double-click on it. To save a page as an image file, right-click on it for various options.

Text

The following material comes straight from my Word document. Formatting is lousy, but at least it works for text searches.

Journal of College and University Law

Winter 1998

*377 BURDEN OF PROOF, UNDUE HARDSHIP, AND OTHER ARGUMENTS FOR THE STUDENT

DEBTOR UNDER 11 U.S.C. § 523(A)(8)(B)

Raymond L. Woodcock [FNa1]

INTRODUCTION

Debtors frequently fail to assert, and courts frequently fail to consider, important factors that should inform any decision regarding the dischargeability in bankruptcy of student loans [FN1] under 11 U.S.C. § 523(a)(8), and especially under subsection (B) thereof. [FN2] This article explores several such factors. [FN3]

*378 Section 523(a) of the Bankruptcy Code provides that certain debts are not dischargeable in bankruptcy. [FN4] Subsection (8) of that section, in particular, provides for the nondischargeability of student loans. [FN5] More precisely, subsection (8)(A) provides that such loans are dischargeable if their repayment has been actually due for more than seven years, and subsection (8)(B) provides, in the alternative, that they are dischargeable if nondischarge would impose an undue hardship on the debtor and his/her dependents. [FN6]

The statute raises two questions to which this article replies: first, which party must plead and prove dischargeability or nondischargeability and, second, what does such pleading and proof entail? [FN7] The first question requires an allocation of the burdens of pleading, persuasion, and production of evidence. After providing historical background in sections I and II, this article treats those three burdens in sections III, IV, and V, respectively. Sections VI and VII then examine the second question, addressing, respectively, the standard of proof that the burdened party must meet in order to carry its burden successfully, and certain aspects of the way in which current leading cases implement that standard.

Although the following discussion will incidentally suggest certain improvements to statute and regulation, the primary focus of this article is upon proper interpretation of the statute as written, rather than upon some alternative form of statute. The arguments presented here do support the views that Congress acted emotionally rather than rationally in creating the student loan exception to discharge, that Congress has created and *379 developed that exception in a counterproductive and sometimes inscrutable fashion, and therefore that § 523(a)(8)(B) should be rethought or repealed, as others have recommended; [FN8] but those points and their implications are incidental for present purposes and have not been fully developed here. The primary goal of this article is, rather, to demonstrate, for the benefit of society as a whole and of student debtors in particular, and perhaps also for the competitive benefit of higher-quality schools, that the federal courts of appeals have almost unanimously misconstrued the statute in its present form.

BACKGROUND: THE BANKRUPTCY DISCHARGE GENERALLY

In 1787, when listing the powers that should reside in the federal government, the framers of the Republic deemed bankruptcy worth mentioning specifically. [FN9] Few subjects were so named, and the others on that list- e.g., the powers to tax, to raise an army, to print money-are so significant as to suggest a fundamental importance for bankruptcy.

Under the Constitution’s grant of power, Congress passed laws on bankruptcy in the 1800s, [FN10] culminating in the Bankruptcy Act of 1898. [FN11] According to a committee report describing that Act

[u]nder this bill no assent is required from the creditors. If the debtor has acted dishonestly by committing certain acts forbidden in the bill he will not be discharged; if he has acted honestly he will be. The granting of a discharge is justified by a wise public policy. [FN12] That Act of 1898 “recognized formally. . . the overriding public interest in granting a discharge to ‘honest but unfortunate’ debtors [because] society as a whole benefits when an overburdened debtor is freed from the oppressive weight of accumulated debt.” [FN13]

When the Bankruptcy Code of 1978 [FN14] replaced the Bankruptcy Act of 1898, a House Report remarked that “[t]he purpose of straight bankruptcy *380 for [debtors under Chapter 7 of the Bankruptcy Code [FN15]] is to obtain a fresh start, free from creditor harassment and free from the worries and pressures of too much debt.” [FN16] In 1933, and again in 1991, the Supreme Court forcefully affirmed that

[t]his [fresh start] purpose. . . has been again and again emphasized by the courts as being of public as well as private interest, in that it gives to the honest but unfortunate debtor who surrenders for distribution the property which he owns at the time of bankruptcy, a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. [FN17]

Courts have repeatedly stressed the overriding [FN18] importance of this “new opportunity in life” by indicating that it is intended to be fully effective [FN19] and complete; [FN20] that exceptions to discharge should be confined to those plainly expressed in the statute [FN21] and should be narrowly or strictly construed against the creditor [FN22] (which accords with the statutory presumption in favor of granting the relief requested by the debtor [FN23]); that denial of discharge is intended to work against egregious conduct, not honest debtors; [FN24] and that the reasons for denying discharge must be real and substantial, not technical and conjectural. [FN25] Work in the fields of economics, sociology, and psychology supports a continued belief in the wisdom, for society as a whole, of granting a fresh start to the floundering *381 individual, so as to preserve his/her dignity and keep him/her productively located in the mainstream of society. [FN26]

BRIEF HISTORY OF THE STUDENT LOAN EXCEPTION TO DISCHARGE

In 1973, the Report of the Commission on the Bankruptcy Laws [FN27] stated that there existed a “rising incidence of consumer bankruptcies of former students motivated primarily to avoid payment of educational loan debts” and a fear that “the incidence will continue to increase as greater numbers of higher educational loans become payable.” [FN28] To address these concerns, that Bankruptcy Commission prepared a draft statute that would except student loans from discharge under certain circumstances. [FN29] This draft led eventually to § 439A [FN30] of the Education Amendments of 1976, [FN31] which was *382 repealed in 1978. [FN32] Then, despite considerable congressional hesitation [FN33] based on significant objections, [FN34] the exception to discharge became a part of the 1978 Bankruptcy Code in an unexplained compromise between House and Senate. [FN35]

Since 1978, Congress has revised the student loan exception several times. These repeated revisions have prompted some to suggest that the trend in Congress is to make the discharge of student loans more difficult. [FN36] With one exception, however, all of the revisions have merely emphasized that the statute is intended to reach a variety of educational loans and benefits. [FN37] No legislative commentary has suggested any intent to tighten the standard by which discharges are granted. [FN38]

The 1990 changes continued in that vein, expanding the statute’s coverage to include educational benefit overpayments. [FN39] Unlike previous amendments, however, the 1990 amendments also tightened one of the subsections of § 523(a)(8), changing the period in § 523(a)(8)(A) from five *383 years to seven. [FN40] Again, however, as a very small part of a large piece of legislation on an unrelated subject (namely, the Crime Control Act of 1990), there was no legislative commentary indicating any larger congressional purpose vis-a-vis student debtors. [FN41] In any event, this amendment, like the earlier ones, bore no evident relationship to the meaning of undue hardship under subsection (B).

It seems possible that the period was changed to seven years, on November 29, 1990, [FN42] in response to the amendment, on November 5, 1990, [FN43] that made the treatment of student loans under Chapter 13 parallel, [FN44] through § 523(a)(8), to the treatment under Chapter 7. [FN45] But that link would only underscore the likelihood that Congress was not devoting any sustained attention to undue hardship under § 523(a)(8)(B): those Chapter 13 amendments had been passed without even being considered by the congressional committees having jurisdiction over bankruptcy laws. [FN46] In sum, congressional attention to student loan discharge since 1978 hasbeen limited to tinkering. [FN47] The theory that Congress has been intensely interested in minimizing the number of discharges does not square with other statutes, [FN48] nor with the fact that Congress has declined to revise the statute to eliminate the relative leniency that many courts have shown toward student debtors. [FN49]

*384 For purposes of discussion, this article accepts the judicial assumption, based merely on statements by a few proponents in the House of Representatives, [FN50] that in 1978 Congress did have a clear intent consisting of two specific goals: rescuing the student loan program from insolvency, and preventing abuse [FN51] of the bankruptcy process by undeserving [FN52] student debtors. [FN53] It seems undeniable, however, that courts should hesitate to enforce that ill-proven, deciphered intent at the expense of established policy. For example, it may be true that, in § 523(a), Congress expressed the conclusion that “the creditors’ interest in recovering full payment of debts in these categories outweighed the debtors’ interest in a complete fresh start.” [FN54] Yet this would merely imply that discharge under § 523(a)(8) is not primarily an act of mercy for the benefit of debtors. It would not resolve the question of when a fresh start would serve society’s best interests by enabling a bankrupt college graduate to become productive. [FN55]

*385 Given the principle that laws are to be presumed consistent with each other, and that the court’s duty is to harmonize and reconcile them, [FN56] one might hesitate to assume that the fresh start policy and the policy of preserving the student loan program must “collide” with each other-such that the fresh start policy “must yield” [FN57]-if, instead, one can detect a more harmonious construction. [FN58] Materials presented throughout the following pages support the view that the § 523(a)(8) exception to discharge contains no conflict with the fresh start policy, but is intended merely to refine that policy’s concept of the “honest but unfortunate debtor” [FN59] by raising this question: how honest and unfortunate must the student loan debtor be?

III. BURDEN OF PLEADING

To address, first, the issue of which party must file the initial complaint, one might begin with § 523(c)(1), which requires the creditor to request a judicial determination of nondischargeability for debts specified in subsections (2), (4), (6), and (15) of § 523(a). [FN60] If the creditor fails to do so, then, with certain exceptions, debts under those subsections will be discharged. [FN61]

Those four subsections do not include subsection (8). That is, student loan creditors have no express statutory duty to request a judicial determination of nondischargeability. This is consistent with Senator DeConcini’s description of subsection (8) as a “self-executing” provision by which the creditor “is not required to file a complaint to determine the nondischargeability of any student loan” [FN62] (although creditors still can, and do, *386 file such complaints [FN63]). That is, it appears that Congress intended to curtail the automatic discharge of student loans. [FN64] This was a change from prior law: [FN65] the Bankruptcy Commission draft, upon which the prior § 439A was based, [FN66] required the creditor to file the complaint if it wished to prevent a discharge. [FN67]

In other words, by this self-executing feature, if the disputed debt is a student loan of a type to which § 523(a)(8) applies, the debtor must file the complaint if s/he wishes the loan to be declared dischargeable. [FN68] If the debtor fails to do so, the loan is automatically treated as nondischarged, [FN69] and the creditor may proceed to collect it. [FN70]

It is important to note, however, that the statute does not attempt to cover every ostensibly educational debt. The very words of subsection (a)(8) pose a variety of questions as to the kind of debt (e.g., a loan), its purpose (i.e., educational), the nature of the transaction (e.g., a guarantee), and the type of institution (e.g., governmental, nonprofit) that the statute is intended to protect. As explored in more detail infra, such factors can be significant, and sometimes determinative, in excluding debts from the protection of § 523(a)(8). [FN71]

*387 Thus, if the debtor maintains no objection to the characterization of the debt as one that falls within that protection, there does not appear to be any basis for resisting the operation of the self-executing feature, and if either party is to file a complaint to determine dischargeability, it will probably have to be the debtor. On the other hand, the debtor can hardly be blamed for failing to file a complaint for relief under the statute if s/he believes that the statute does not even apply to the facts of the case. [FN72] The debtor may also fail to file a complaint to determine dischargeability because of a natural tendency to avoid the whole problem [FN73] or because s/he lacks the ability to represent him/herself, [FN74] the money with which to hire an attorney and pay the court fees, [FN75] the desire to commence an action that may seem to have factual merit but little likelihood of winning, [FN76] or the nerve to risk being held liable, upon losing, for the creditor’s attorney fees and costs. [FN77]

There is no specific deadline by which the debtor must file a complaint to determine dischargeability. [FN78] Given the lack of any statute of limitations upon student loan collections, some student loan creditors have demonstrated a willingness to let matters hang in limbo for years. [FN79] While the debtor may find such inaction agreeable in the short-term, s/he (and society) may suffer longer-term disadvantages (in terms of e.g., credit rating *388 and reintegration into society). [FN80] Excessive delay may also create laches or estoppel problems for the debtor as well as the creditor. [FN81]

If the debtor fails to file a complaint to determine dischargeability because s/he believes that the disputed loan does not fall within’ 523(a)(8), or for any of the other reasons just cited, the matter might not be settled within the bankruptcy court. Federal courts do have exclusive jurisdiction over the bankruptcy petition itself, but they share concurrent jurisdiction with state courts over all other matters related to the bankruptcy case. [FN82] At some point, the automatic stay will be terminated, [FN83] the bankruptcy case will be closed, [FN84] and the creditor will be free to commence or resume collection efforts-which may include suit against the debtor in state court- without any further litigation to determine the dischargeability of the debt. [FN85] Absent an effort by the debtor to reopen the case in bankruptcy court, [FN86] the debtor’s objections to the debt may then go unheard unless s/he files a complaint to determine dischargeability in state court. [FN87]

*389 It may seem somewhat paradoxical that the debtor must file a complaint under § 523(a)(8) in order to prove that the disputed loan does not come under § 523(a)(8). [FN88] If there is any such paradox in a given case, it may impose upon the debtor the need to take care to avoid conceding preliminary issues that the creditor would otherwise have to prove. [FN89]

A review of the parties’ positions at the pleading stage leads to a suggestion for an improvement in the law on this point. The background considerations for this suggestion are as follows: (1) The creditor bears the initial burden of persuading the court that the disputed loan is of a type to which § 523(a)(8) pertains. [FN90] (2) The burden of persuasion ordinarily follows the burden of pleading. [FN91] (3) The creditor wants its money and is required by law to pursue collection. [FN92] (4) If the creditor’s collection efforts require litigation, then the creditor must file a complaint at that point anyway. [FN93] (5) Regulations allow the creditor to recover its litigation expenses from the debtor, but contain no similar provision on the debtor’s behalf. [FN94] (6) The fee for a complaint to determine dischargeability may be a significant barrier to the honest but unfortunate debtor. [FN95] (7) The debtor’s relative inability to defend him/herself suggests that the imposition of a given requirement upon him/her is more likely to produce injustice than if the same requirement is imposed upon the creditor. [FN96]

Given those factors, a more just and efficient approach would be to reinstate the concept expressed in the original draft of the statute, on the subject of pleading, [FN97] by placing the burden upon the creditor to file the action to determine dischargeability (which the creditor might elect to include with its collection action in state court). In the interests of minimizing unnecessary litigation, the creditor might also be asked to notify the debtor of its intention to file, to inform the debtor that s/he may be responsible for the filing fee and other costs incurred by the creditor if such debt is held nondischargeable, and to indicate the extent of its flexibility in structuring a payment plan in lieu of litigating. [FN98] (Note that, whether *390 adopted or not, this suggestion does not substantially affect the burden of persuasion or other significant issues discussed in the following pages.)

BURDEN OF PERSUASION

The remainder of this article proceeds on the assumption that the parties have filed pleadings that raise and dispute the issue of student loan dischargeability. The question then becomes, how do the parties prove what they have pleaded?

Distinguishing the Burdens Generally

Within the general idea that one party or the other must bear a “burden of proof,” there are two distinct concept-burden of persuasion and burden of production (also called the burden of “producing” or “going forward with” evidence)-that courts have often failed to distinguish clearly. [FN99]

There is also a related concept, “standard of proof,” which invokes one of three standards: “beyond a reasonable doubt” (typically used in cases involving criminal guilt), or “by a preponderance of the evidence” (typically used in civil actions between private litigants), or, midway between those two, “by clear and convincing evidence” or some similar phrase (typically used in civil actions where particularly important individual interests or rights are at stake, e.g., allegations of fraud or other quasi-criminal wrongdoing). [FN100] The standard is chosen according to the perceived need for accuracy; for example, while wrongly awarding money in a civil case to the plaintiff seems no worse than wrongly awarding money to the defendant (and therefore calls for a mere preponderance-of-the-evidence standard), wrongly convicting an innocent person is considered much worse than wrongly acquitting a guilty one (hence the beyond-a-reasonable-doubt standard in criminal prosecutions). [FN101]

The general nature of the ultimate issue (e.g., criminality) thus prompts the general choice of standard of proof (e.g., beyond a reasonable doubt), which in turn partially defines the specific burden of persuasion that a party must bear under the circumstances of the particular case. [FN102] That is, while *391 the standard of proof does not tell exactly what the party must prove, it does tell how persuasively that party must prove it. [FN103]

In this light, one might ordinarily describe the burden of persuasion as the most skeletal post-trial review of a case, consisting of two questions: what was the party required to prove with respect to the ultimate issue (e.g., guilt as to the specific crime), and did s/he prove it strongly enough to satisfy the applicable standard of proof? [FN104] Even if a case somehow involved more than one ultimate issue, it would still be possible to ask these two stark questions with respect to each such issue separately; hence, a burden of persuasion generally does not (and need not) shift from one party to another during the course of a trial. [FN105] Which party will finally be held responsible for bearing the burden of persuasion on the ultimate issue may seem quite clear at the start of some trials [FN106] and less so at the startof others. [FN107]

Needless to say, the party wishing to persuade must ordinarily introduce persuasive evidence. [FN108] But this burden of producing evidence, unlike the burden of persuasion, will shift to the other party once the burdened party *392 makes a “prima facie” case. [FN109] Making a prima facie case means producing enough evidence to raise an issue that, in the opinion of the judge, [FN110] calls for review by (and may or may not ultimately persuade) the trier of fact. [FN111]

The shift of the burden of production to the other party requires that party to rebut the prima facie case. [FN112] The nature of the burden does not change; like the prima facie case, this rebuttal must produce evidence that, if believed by the trier of fact, would support its claims. [FN113] If the rebuttal meets this burden of production, the trier of fact may then be asked to decide which of the competing sets of evidence is more persuasive; [FN114] or, conceivably, the ultimate issue in the case could be treated as having been refined, in which event the party that presented the prima facie case may once again bear the burden of production. [FN115]

For either party, the burden of production asks whether there is enough evidence to submit to the factfinder, while the standard of proof has to do with the persuasiveness of evidence already submitted to the factfinder. Thus, the judge’s decision as to whether the parties have produced enough evidence to carry their burdens is made prior to the phase of trial in which *393 the standard of proof becomes relevant, and is unaffected by that standard. [FN116]

The Burden of Persuasion in Student Loan Discharge Cases

The ultimate issue between student loan creditor and debtor is ordinarily a money issue. As such, it calls for the preponderance-of-the-evidence standard of proof, [FN117] which the Supreme Court has assigned, in Grogan v. Garner, to the determination of dischargeability under all subsections of § 523(a). [FN118] Moreover, as Grogan indicates, the burden of persuasion under all such subsections is on the creditor. [FN119] These observations raise several questions about the current status of the case law in this area.

Summary of Case Law

As suggested by the foregoing discussion of pleading, [FN120] the first question is whether § 523(a)(8) applies to the disputed debt. The consensus, in cases addressing that question, is that the creditor bears a burden of proving the existence of an educational debt as defined in the statute. [FN121] Before reaching the question of undue hardship, courts also require the creditor to show that the debt does not qualify for discharge under § 523(a)(8)(A)-i.e., that it has been due for less than five (now seven) years. [FN122] Courts have described *394 the burden at this stage as the burden of proving nondischargeability. [FN123]

Where the applicability of § 523(a)(8) is undisputed, or the creditor proves its applicability as just described, the discussion of burdens enters another phase. Federal appellate court opinions have generally stated simply that, at this point, the debtor has a burden of proof, without (a) specifying the kind of burden or (b) explaining how the debtor acquired it. [FN124]

On the former question, regarding the kind of burden, the consensus of the lower courts seems to be that it is a burden of persuasion, to be carried by the preponderance of the evidence, [FN125] rather than merely a burden of production to which no such standard of proof would apply. [FN126] This burden of persuasion does seem to imply a corresponding burden of production, however, such that, once the debtor makes a prima facie case, the burden shifts to the creditor to present a credible rebuttal. [FN127]

On the latter question, regarding how the debtor acquires this burden of persuasion, one should note, first, that courts variously describe the issue to be proved at this stage as both the issue of undue hardship [FN128] and the issue of dischargeability (or nondischargeability). [FN129] Lacking any sign of *395 judicial consternation at this flexible phraseology, one must conclude that, once § 523(a)(8) is found to apply to the debt, courts construe undue hardship and dischargeability as being essentially the same issue.

At both stages, then-that is, regardless of which party bears the burden-courts say dischargeability is the issue. One would not expect otherwise in a statute commonly described as a “discharge exception.” [FN130] Thus, both parties bear burdens on a single issue. Some courts, evidently missing this bifurcation, describe the placement of the burden on the debtor as a mere exception [FN131] to the general rule that the burden of proving dis- chargeability is entirely the creditor’s. [FN132] Others acknowledge, more accurately, that the burden of persuasion is being “split” [FN133] in a non- concurrent fashion; i.e., shifted. The authority for this shift is commonly traced back to the case of Financial Collection Agencies v. Norman, [FN134] to which this discussion turns.

Norman Rebutted

Norman shifted the burden of persuasion, so as to require the debtor to show undue hardship, for four reasons: (1) under § 523(a)(8)(B), undue hardship is an “exception to the exception” in the sense in which Justice Holmes used the phrase in Hill v. Smith, [FN135] and therefore requires the same shift in the burden as Justice Holmes required; (2) reasoning by analogy, “in the field of civil procedure the burden of proof is likewise placed on the party who would claim a hardship”; (3) the debtor “has peculiar access to [[information about] her own personal affairs” that “forms the basis for determining if repayment would be a hardship”; and (4) undue hardship is an affirmative defense. [FN136] The following paragraphs discuss certain matters *396 pertaining to these four rationales.

Authority

Norman’s authorities did not all say what the court said they did. For instance, one of the two early cases which supposedly “declared” that a claim of undue hardship is in the nature of an affirmative defense made, in fact, no such statement, but merely indicated that the debtor had pleaded undue hardship as an affirmative defense-under the statute prior to § 523(a)(8)(B), by which creditors filed complaints. [FN137] Also, the case Norman cites listing three “usual rules of the law of evidence” [FN138] dealt with the initial placement of burdens, not their subsequent shifting, and indicated in any event that it was selecting three, not all, of those “usual rules” according to the needs of the particular case. [FN139] Further, Hill v. Smith appears to have shifted the burden of production, not of persuasion. [FN140]

Moreover, regardless of which burden was being shifted, Norman misconstrued the point of Hill. Justice Holmes stated, in essence, that under the statute in issue [FN141] and for the sake of justice itself, the debtor had to be held responsible for failing to make sure that debts were scheduled or that creditors knew or had been notified of the bankruptcy. Holding a debtor thus responsible for his/her own intentional or negligent breach of *397 bankruptcy procedure has no negative implications for a debtor who observes such procedure by pursuing a discharge in the prescribed manner.

Further, Justice Holmes justified a shift in the burden for reasons of justice and policy, [FN142] and not merely because of the statute’s grammatical structure. [FN143] One could not justify a principle that detected “an exception to the exception,” sufficient to shift an otherwise immovable burden of persuasion, every time a statute contains a caveat marked by words like “except” or “unless.” [FN144] Such an approach has been rejected by courts construing other subsections of § 523(a), [FN145] including not only the somewhat similarly phrased § 523(a)(15) [FN146] but also § 523(a)(8)(A). [FN147]

Analogy to Civil Procedure

Norman cites the Stonybrook [FN148] case to support the view that “in the field of civil procedure the burden of proof is likewise placed on the party who would claim a hardship.” [FN149] As Norman says, Stonybrook addresses pro-cedural hardship, stating that the court will become concerned when pre- trial discovery “demands are unduly burdensome or oppressive with rela-tion to the case itself.” [FN150] This is an apt description of the debtor’s present situation in the student loan context. The placement of extreme procedural burdens upon the debtor is indeed an excessive hardship [FN151] (although, to preserve some clarity, this article generally does not refer to “the extreme procedural hardship of having to show extreme substantive hardship”). *398 That is, the relevance of Stonybrook derives not, as Norman seems to suggest, from the vacuous observation that the word “hardship” happens to be used there but, rather, from its principle-with which a student loan debtor might readily agree- that when the creditor requires an oppressive degree and kind of proof, justice calls for an adjustment of the load.

Peculiar Access to Information

Although Norman would base the burden of persuasion upon the belief that the debtor “presumably” has “peculiar access” to information about his/her own degree of hardship, [FN152] that is but one of the principles which courts consider when allocating a burden. [FN153] To rebut any suspicion that the debtor generally has exclusive access to necessary information, [FN154] section VI of this article analyzes the kinds of information needed and the extent to which the creditor has equal or better access. [FN155]

Affirmative Defense

For several reasons, Norman’s view that undue hardship is an affirmative defense does not fit the structure of § 523(a)(8). First, a debtor’s undue hardship pleading bears no immediate resemblance to any of the classic affirmative defenses. [FN156] Second, a debtor who challenges the applicability of § 523(a)(8) [FN157] and also alleges undue hardship, in the alternative, can hardly be described as admitting the creditor’s cause of action. In such a case, there exists none of the “confession” required for an affirmative defense, [FN158] raising the question of whether Norman would *399 consider undue hardship an affirmative defense in only some § 523(a)(8)(B) cases. Third, because of their extraneous nature, affirmative defenses must be affirmatively pleaded, so that the opposing party has notice of the additional issue and may prepare to litigate it; [FN159] but one cannot describe undue hardship as “extraneous” when it is part of the very statute that will determine the case. Fourth, since an affirmative defense arises in response to an assertion by the other party, [FN160] Norman would seem to imply that a debtor’s complaint could not even mention undue hardship, because at that point the other party would not yet have filed anything in response to which the debtor could plead this so-called defense. That is, until Congress places the burden of pleading upon the creditor, [FN161] the debtor’s duty to plead undue hardship in his/her own complaint [FN162] will logically exclude the possibility that the debtor could plead undue hardship as an affirmative defense against someone else’s complaint.

If it seems easier to imagine that undue hardship is an affirmative defense because it is set off in its own subsection, one might ponder the evident congressional intent to continue the approach of prior law regarding the parties’ respective burdens. [FN163] The Bankruptcy Commission had explicitly placed the burden of showing undue hardship on the creditor; [FN164] and both the Commission’s 1973 draft [FN165] and § 439A of the Education Amendments of 1976 [FN166] may be paraphrased as saying, in pertinent part, that student loans of the type to which § 523(a)(8)(B) applies are discharged *400 except where repayment will impose no undue hardship. A phrasing along those lines-which would have the same substance as § 523(a)(8)(B)-may have been rejected solely because of its grammatical awkwardness under the general format of § 523(a), which lists debts that are “not discharge[d]” rather than those that are “discharged except where. . . .” [FN167]

Finally, for purposes of illustration, one may consider a hypothetical situation in which an affirmative defense could arise in connection with undue hardship. If, as some courts have suggested, the debtor’s negligence in creating his/her own hardship were relevant, [FN168] then the debtor might retort, as an affirmative defense, that the creditor bore contributory responsibility for that hardship. For example, if the creditor asserted that the debtor was to blame for making a poor educational decision, [FN169] the debtor might reply that the school providing a poor education bore some responsibility for the result [FN170] and that the court should take into account the violation, by the school or some other party to the lending transaction, of laws whose observance might have produced a better outcome. [FN171] Nevertheless, as this example shows, each party might have to produce evidence on a sub-issue, but none of that would necessarily affect the allocation of the ultimate burden of persuasion.

Burden of Persuasion Summary

It is clearly and emphatically the duty of the courts to construe the statute in the debtor’s favor. [FN172] Inexplicably, however, most [FN173] courts have instead cited indefensible rationales (or no rationales at all) for shifting the *401 burden of persuasion to the debtor in § 523(a)(8)(B) cases. [FN174] There is only one issue of dischargeability, for which the creditor bears the burden of persuasion. [FN175] Since one cannot tell whether Congress would have wanted a particular loan to be held nondischargeable until one has determined whether its repayment would impose an undue hardship, [FN176] the creditor who fails to persuade on that question fails to establish an essential characteristic of the debts that § 523(a)(8) bars from discharge. [FN177]

BURDEN OF PRODUCTION

Courts that would shift a burden of persuasion or production to the debtor under § 523(a)(8)(B) ordinarily indicate that this shift should not occur until the matter of undue hardship arises. [FN178] It seems evident, then, that under any interpretation, the creditor bears the burdens of persuasion and production on questions logically preceding the issue of undue hardship. In the following pages, subsection A examines such questions.

Once those preceding matters are concluded and the issue of undue hardship is squarely in view, it becomes necessary to decide whether the burden of production on that issue should shift to the debtor. In the following pages, subsection B steps through the process of proving undue hardship and demonstrates that it is rarely necessary or advisable to shift the burden of production on that issue to the debtor.

The Creditor’s Burden of Production on Issues Logically Preceding

Undue Hardship

As noted supra, the burden of persuasion begins (and should stay) on the creditor, to show nondischargeability by a preponderance of the evidence; [FN179] the burden of persuasion ordinarily imposes a corresponding burden of production; [FN180] and the statute raises a number of questions that must be resolved before it is established that the disputed debt falls within the statute’s scope. [FN181] On that basis, the following discussion suggests that the accuracy, efficiency, and equity of student loan discharge decisions are *402 greatly improved when courts require creditors to establish certain matters, often neglected in the reported cases, that are essential to verify compliance with the purpose of § 523(a)(8).

Loan-Related Records and Calculations

As a threshold issue, the student loan exception to discharge is limited to situations in which funds have changed hands with an obligation to repay; the statute does not cover every type of debt that a student might owe a school. [FN182] (Among the variety of public and private loan programs, when it is necessary to examine specific terms of a loan program, this article will generally concentrate upon the Federal Family Education Loan Program [[hereinafter referred to as the “FFEL” program], [FN183] which has been by far the largest. [FN184])

Typically, in a student loan program, students take out loans to finance their educations, are given a grace period of six to nine months after graduation, and must then begin repayment according to a schedule provided by the creditor. [FN185] The debtor may qualify, however, for a temporary cessation of payments during an authorized period of deferment or forbearance. [FN186] Deferments, which under § 523(a)(8)(A) should be treated *403 as “applicable suspensions,” [FN187] and forbearances, which should not, [FN188] are available in a variety of circumstances. [FN189] The creditor, as the party that *404 would otherwise seek collection, must decide whether it believes that a deferment or forbearance is warranted in a given situation [FN190] and, if so, must make appropriate adjustments to its calculations of the amount of time remaining in the loan repayment period [FN191] and of the amounts of any interest, late fees, attorney’s fees, and collection costs [FN192] that it may seek from the debtor.

Since it is not possible to determine the amount of time that has elapsed for purposes of § 523(a)(8)(A) without knowing what deferment and forbearance decisions the creditor has made, nor to estimate the impact of loan repayment upon the debtor’s finances for purposes of § 523(a)(8)(B) without knowing the amounts and duration of the payments the creditor expects to receive, [FN193] nor to assess the validity of any such time or money calculations until they are laid out plainly, the creditor in any § 523(a)(8) case should have its records in sufficient order to allow it to justify any deferments, forbearances, or resulting calculations. [FN194] The ability to prepare such calculations, particularly in a complex situation, [FN195] is much more likely to lie in the creditor’s hands than in the debtor’s or even the court’s- indeed, the creditor is required for other reasons to make such *405 calculations before trial [FN196]-but experience suggests that, if the court wishes to have that information on hand, it may have to compel creditors to share it. [FN197]

Solvency of the Student Loan Funds

Surprisingly, in response to Congress’ interest in rescuing the student loan program from insolvency and preventing abuse of the bankruptcy process by undeserving student debtors, [FN198] courts have very rarely asked about the current solvency of the student loan funds, or about the impact that a particular discharge might have upon them. [FN199] Yet the goal of preserving their fiscal health is ostensibly relevant to the statute’s scope. [FN200] That is, Congress would presumably not intend to apply the statute to a situation in which nonabusive debtors would be denied a fresh start for the *406 sake of a fund that was experiencing no risk of insolvency; and in a particular case the statute’s preservative intent, at least, must be satisfied when the fund at issue is in good health. [FN201]

Moreover, for funds that do come into difficulty, the 1991 report of a congressional investigation headed by Senator Sam Nunn showed the importance of inquiring into the reasons for such trouble in a § 523(a)(8)(B) proceeding. The report indicated “an overwhelming number of problems and a proliferation of abuse [of students and loan funds] in the operation of the [Guaranteed Student Loan Program].” [FN202] Problems included unscrupulous school practices; inadequate state licensing protection; failure of accreditation bodies to assure the quality of education required for program participation; exploitation by lenders, guarantors, and loan servicers; and gross mismanagement by the Department of Education. [FN203] Likewise, a 1993 report by the General Accounting Office found “material weaknesses” in that Department’s ability to collect good data and “serious problems in the program’s structure.” [FN204] It is especially telling that guaranty agencies-which are often debtors’ adversaries in court [FN205]-were singled out as exploiters of the system: such agencies failed to pursue collection and deliberately allowed loans to default, [FN206] so that they could obtain full reimbursement from the government [FN207] and then receive additional reimbursement from the debtors through post-default collections efforts. [FN208] Subsequent studies have found that such problems persist [FN209] despite intensive congressional efforts to eradicate them. [FN210]

Such reports suggest several reasons for takingaccount of loan fund solvency in the present context. First, subjectively, the reports may counteract the urge to assume that student loan discharge cases ordinarily pit a well- intentioned, respectable institution against a debtor of low character. [FN211] The reports demonstrate that loan fund insolvency may be attributable to misbehavior by parties other than the debtor and, therefore, that debtors should not be expected to guarantee the funds’ survival singlehandedly. [FN212] Thus, in a hypothetical case, where a school approves a loan solely to repay itself for tuition on an overpriced [FN213] or deceptively marketed [FN214] “education” having insufficient real-world value, the school, not the debtor, is the party endangering its own loan fund.

*408 Second, if a particular discharge would not add significantly to the risk of a fund’s insolvency, then Congress would presumably not approve the insolvency concern as a rationale for nondischarge in the particular case. On the basis of this principle (not to mention common sense), it might be reasonable to display more concern for a loan of $75,000 than for one of $250; [FN215] or for a fund in danger of insolvency (through no fault of its own) because of debtor bankruptcy, than for one that is endangered by its own malfeasance or incompetence and therefore should be weeded out. [FN216]

Third, one may fairly question the degree of and reasons for the alleged insolvency when student borrowers may have already paid billions in loan origination fees [FN217] and may currently be paying the lender’s full cost of its own loan insurance [FN218] to cover the very sort of loss that discharge might impose. [FN219] In the business world, one who pays insurance premiums gets coverage. A similar rule should apply here. Otherwise, loan fund solvency begins to look like a rationalization for abuse of the legitimate borrower. [FN220]

In retrospect, it seems unfortunate that courts have virtually never asked whether creditor misconduct has had a relevant impact upon fund solvency or upon debtor behavior. A more active judicial interest in such solvency, and in the parties’ respective contributions to or detractions from it within the specific case, might have injected some beneficial scrutiny during the past two decades. It might also have prompted a more realistic appraisal of the debtor’s side of the equation. As a contrast to the foregoing suggestion that the greatest threat to the funds came from the incompetence or corruption of some who managed, regulated, guaranteed, or ultimately *409 received payment from the funds, one notes that many student loans are in default status, [FN221] but that relatively few student borrowers in any decade have taken the additional step of filing bankruptcy. [FN222] Bankruptcy poses many long- term threats to one’s career, credit, self-respect, and social status; and for such reasons, it has always affected only a tiny percentage of student loans- historically, not even enough to use up the loan insurance, much less endanger the funds themselves. [FN223] Or, if the figures are otherwise in a particular case, then by all means the creditor should be encouraged to produce them.

Ultimately, a review of the fund’s solvency cannot lead to a discharge inconsistent with the words of the statute. [FN224] It can have an impact, however, not only upon a balancing of equities in determining undue hardship, [FN225] but also upon the interpretation of the statute’s introductory words. For instance, is a lending or guaranty institution “nonprofit” within the spirit and letter of the statute if its student loan activities turn a profit? Is a surplus-generating program “funded” by the government? Is the loan insured or guaranteed by a governmental unit if misbehavior by the creditor renders it ineligible for governmental reimburse ment? [FN226] If Congress considered fund solvency fundamental on the question of discharge, a court should not lightly conclude otherwise.

Compliance with Applicable Law

In anticipation of or response to abuses like those just mentioned, federal laws evince great concern for compliance, by non-debtor participants, with abuse-preventive guidelines. [FN227] Given the century-old *410 fresh start policy, it would be indefensible to deny discharge in favor of a creditor whose behavior, alone or in concert with other non-debtor parties, has violated such laws to the detriment of students or taxpayers, or to extend the protection of the bankruptcy statutes to loans made in disregard of such laws. [FN228]

Ordinarily, the debtor might have to bring such violations to the attention of the court in its pleadings. But in some instances, indicia of malfeasance may be obvious even if the debtor does not raise them. [FN229] For example, one may look askance at a creditor who insists that the debtor has the ability to pay, and that it has diligently undertaken the collection efforts required by law, [FN230] and yet has managed to collect virtually nothing. [FN231] As another example, in determining whether a loan falls under § 523(a)(8), the *411 implausibility of the creditor’s case may be evident from the face of the promissory notes. [FN232]

Whether raised by court or debtor, a creditor’s violation of governing statutes and regulations is relevant (and may be determinative) as a factor removing the disputed debt from the ambit of § 523(a)(8) in general or from subsection (B) of that statute in particular, or aggravating his/her hardship thereunder. For instance, the awarding of loans outside an authorized educational program [FN233] or for a noneducational purpose [FN234] or without evidence of the debtor’s satisfactory academic progress [FN235] can be *412 determinative; unauthorized deferments have generally not been counted against the debtor in determining the passage of five (now seven) years; [FN236] loans in an amount exceeding the maximum permitted by law have been discharged; [FN237] and when a school with a high default rate on federal loans (inflicting obvious damage on the funds) [FN238] is confronted by one such defaulter under § 523(a)(8), such a school ought to explain why the debtor’s unemployment or underemployment is consistent with nondischarge. [FN239] Other legal requirements that may be important in a particular case include the creditor’s duty to market itself accurately and fairly, [FN240] provide *413 information about the debtor’s payment obligation and alternatives to default, [FN241] respond in a timely and accurate way to the debtor’s inquiries about the loan, [FN242] keep good records, [FN243] disburse loans in multiple installments, [FN244] either comply with the requirements for deferments and forbearances or else pursue collection, [FN245] and disclose accurate current loan *414 information to credit reporting bureaus, [FN246] as well as any other basis on which the loan agreement itself may not be a legally enforceable obligation of the borrower. [FN247]

Summary

Proving the existence of a valid educational debt, of the type that should be scrutinized for the existence of undue hardship, requires the creditor to establish the amounts and time periods at issue, to explain why discharge would endanger the relevant loan fund, and to address any relevant questions of abuse or noncompliance. There is the potential, on one or more of these three points, for the burden of production to shift to the debtor; but at the outset, the creditor cannot demonstrate the existence of a loan requiring the special protection of § 523(a)(8) without producing evidence on these fundamental issues.

The Creditor’s Burden of Production Regarding Undue Hardship

If the creditor demonstrates that the disputed debt is a valid educational loan whose first payment has been due for less than seven years, excluding applicable suspensions, then no discharge will be available under § 523(a)(8)(A), and the statutory inquiry will turn to the question of whether the loan qualifies for discharge on grounds of undue hardship under § 523(a)(8)(B).

That inquiry should not spring immediately to the question of whether the debtor has the ability to repay the loan; rather, as the following discussion indicates, several factors require attention before the court can determine whether it must engage in an invasive and troublesome examination of the debtor’s finances. [FN248] It was noted, supra, that the creditor cannot carry its burden of persuasion on the issue of dischargeability by remaining silent on undue hardship, which is an integral part of that issue; [FN249] similarly, the creditor cannot carry its burden of production on undue hardship without providing evidence regarding the bases upon *415 which a finding of undue hardship might rest. [FN250] Moreover, the following discussion shows that the relative positions of the parties strongly oppose any shift in the burden of production during these inquiries.

Factors Preceding the Question of the Debtor’s Ability to Repay

Section 521(a)(8)(B) does not specify that undue hardship is strictly a matter of the debtor’s ability to make student loan payments. But many courts do limit their inquiry to that issue, often for arbitrary reasons, [FN251] thereby predetermining that no equitable considerations or other factors will be considered. [FN252] Far from construing the statute favorably to the debtor, this approach indefensibly simplifies the creditor’s task and reduces the debtor’s likelihood of success.

General Review of Factors

If one ignores the strong evidence of congressional inattention and confusion regarding § 523(a)(8), [FN253] then one may accept the predominant judicial assumption as to the purpose of the statute, namely, that Congress wanted to protect the solvency of the student loan funds and prevent bankruptcy abuse by undeserving debtors. [FN254] Since the solvency concern has not been specifically at issue in the reported cases, [FN255] the second concern (regarding undeserving debtors) must be the one driving virtually all undue hardship decisions.

In view of this assumed purpose of the statute, the intent of Congress in § 523(a)(8) must have been to target, not every student debtor, but specifically those “undeserving” ones who were believed to be filing bankruptcy on the brink of lucrative careers: [FN256] to prevent such recent graduates from taking advantage of their circumstances, in which they *416 might have large debts, consisting primarily of student loans, [FN257] but might not yet have had an opportunity to accumulate assets that might discourage bankruptcy and facilitate loan repayment. [FN258]

Subsection (A) of the statute provides one response to those concerns, based on the belief that requiring graduates to pass five (now seven) years before discharge would offer a more realistic view of their ability to repay. [FN259] As the statute indicates, debtors who have passed that number of years are so obviously outside the scope of Congress’s presumed concern that discharge of their loans can be granted without further inquiry into their circumstances. [FN260]

Subsection (B) provides an alternate response, allowing additional ways in which the court might accomplish the purpose of distinguishing individuals seeking an “unjust enrichment” through bankruptcy from “those who have realistically fallen on hard times.” [FN261] First, as just mentioned, the number of years since graduation is a relevant factor. Even if the statutory five (or seven) years have not passed, enough time may have elapsed to provide a picture of the debtor’s long-term situation, [FN262] and some courts granting discharges under subsection (B) have cited that number of years as a pertinent factor. [FN263] Second, a number of decisions have noted that student *417 loans comprised only a fraction of the debtor’s total debt load at the time of filing bankruptcy, which would also not match the happy-go-lucky profile of the recent graduate whom Congress envisioned. [FN264] Third, many courts have granted discharges based, in part or in full, upon the fact that the debtor’s education has not produced a lucrative career or even the less- than-lucrative results promised. [FN265]

Pulling together some of those factors, a hypothetical debtor whose loans first came due eleven years before filing bankruptcy under Chapter 7 (but who has received five years’ worth of hardship and unemployment deferments), and whose education was a fraudulent waste of time and money, could be defensibly identified as a person who would not fit the profile of the abuser whom Congress had targeted, and upon whom the repayment of the disputed loans, if compelled, would impose an undue hardship. As that example suggests, it may not be necessary to undertake a detailed analysis of the debtor’s finances in order to get a sense of the merits of his/her bankruptcy filing.

Benefit of the Education: Brunner

Within the several factors just identified, the one regarding the usefulness of the education has received considerable attention. Numerous courts have recognized that a debtor whose education had little practical *418 value is not the sort of debtor to whom Congress intended to deny discharge under § 523(a)(8)(B). [FN266]

But in Brunner v. NYSHESC, [FN267] which has become the leading case on undue hardship in recent years, [FN268] the Second Circuit refused to take account of the value of the education, reasoning that (1) the debtor must live up to the terms of the student loan bargain s/he strikes with the government; [FN269] (2) even if a school forces loans upon a student to finance an education that, for any reason, is not in that student’s best interests, a discharge must be denied because discharge would wrongly penalize the *419 taxpayer; [FN270] (3) granting discharge on the basis of lack of educational value would erroneously make the government an insurer of that value; [FN271] and (4) it is immaterial that the debtor may be unlikely to find a job in the field in which s/he was educated. [FN272] The following paragraphs respond to those theories as enumerated.

(1)Debtor’s Bargain with the Government. Rarely, if ever, does the student debtor strike a bargain with the government. Except when it makes direct loans, the government is, in all likelihood, not even an immediate party to the loan transaction, other than as supplier of standard loan agreements used by schools, banks, and guaranty agencies, each of which have their own agendas. [FN273] And when dealing with such institutions regarding the contents of that standard agreement, the young, unrepre-sented, and inexperienced borrower has virtually no leverage. [FN274] The message of the case law and the federal regulations is not that such agreements should be bronzed and mounted; it is that many of their provisions, when reviewed in the context of bankruptcy, may be suspect. [FN275]

Construing irresponsibility as a trait that may lead to bankruptcy, fiscal or otherwise, one finds it ironic that Brunner should thus absolve such institutions of all responsibility, placing it instead wholly upon the player with the least ability to improve matters. To the typical student borrower, it may seem that all the rules are made by others, and that an especially common bit of advice is to find some form of higher education if one wishes to succeed in this world. Under such circumstances, courts expecting the *420 would-be borrower to negotiate and perhaps reject a financially risky education (especially with no knowledge of better alternatives) are demanding a degree of wisdom and courage that not even the student’s parents or educators may have.

(2)Penalizing the Taxpayer. The taxpayer may bear a portion [FN276] of the cost of student loan discharges. [FN277] Similarly, the coal mine operator bears the cost of a dead canary. But such losses are expected; [FN278] moreover, they raise a very important question, namely, what went wrong? Far from suppressing the news that such mini-crises generate-blaming the canary, as it were-one should recognize them as harbingers of bigger trouble. Sadly, thanks to the mentality of opinions like Brunner, the courts have now spent nearly two decades telling loan-related institutions that they can learn nothing from the occasional student loan bankruptcy. By contrast, a regular stream of discharges, granted to worthy debtors poorly served by loan-related institutions, [FN279] could have helped move the public’s attention from *421 the symptoms to the underlying causes. [FN280]

If education is indeed a business, as its less idealistic representatives sometimes declare, then it should accept the risk, common to most businesses, of having to pay for a few failures. Or, if market forces cannot bring improvements in our educational system, then the taxpayer should get the bill, to encourage public contemplation of an evident conflict between what schools can deliver and what the market will buy. [FN281] It is alarming to think that, even now, the prospect of an increasing number of unemployed college graduates may prompt some judges to conclude, not that those graduates’ educations are obviously unsuited to the demands of the job market but, rather, that discharge must become even rarer. [FN282]

(3)Insurer of Educational Value. If the government were insuring that educations are worth the full amount of time and money invested in them, then it would repay disappointed students, not only for their federal student loans, but also for their years of lost time and their own financial investments in a wasted education; and it would do this for each student whose education fails, not merely for the bankrupts. To correct Brunner, instead of speaking of insurance, a better analogy is the situation in which one agrees, upon receipt of specified goods, to make payment to a third party. The latter should not be surprised if payment is delayed until the goods arrive. [FN283] Here, as in the mistaken assumption that student loan discharge is primarily an act of mercy, [FN284] some courts seem obsessed with enforcing the philosophy that government is not a safety net, to the point of ignoring steps that may serve the best interests of both the public and the individual.

(4)Inability to Find Work in the Field of Study. According to Brunner, society should willingly accept a state of affairs in which each student may spend four or more years in college, living primarily on funds supplied by the government and others, and then graduate and move on to a job (or, more likely, a series of jobs) having little to do with the field of one’s *422 degree. [FN285] The proverbial Ph.D. driving a taxi may be an occasionally fascinating part of American culture; but when similar incongruities occur in many thousands of lives, one must wonder whether economic efficiency and personal happiness could have been better served by greater attention to the nexus of individual interests and market needs. [FN286]

Brunner’s seeming belief that such mismatches are the unpreventable result of intellectual freedom would make more sense in a world untroubled by such practical factors as the conflict of interest that schools experience between competitively marketing themselves and being fully candid about their weak points; the urge to acquire students who improve the school’s diversity in race, gender, or some other regard, without asking whether the acquired student will be able to repay the resulting student loans; the professorial temptation to train students to become excited about unmarketable academic pursuits without providing concomitant warnings about real-world job prospects; and the phenomenon of schools flaunting prestigious names, certificate programs, and other devices by which to attract borrowed tuition dollars, all of which nevertheless prove insufficient to prevent bankruptcy in the individual case. [FN287]

It may take years for debtors to obtain a sense of what they might have gotten from an education in some other field or school, and in any event they cannot go back and do it over. By contrast, schools can and should be urged to improve themselves every semester, learning from the previous semester’s mistakes. After all, they are the ones claiming to have knowledge with which to educate others on the most important topics within the various disciplines. Schools’ expenses for helping their students understand and succeed in their careers will often be repaid in long-term support from grateful alumni and an appreciative public; and from a policy perspective, those expenses pale against the cost to society of carrying ill-fitted graduates in the workforce for decades thereafter.

Those, in any event, are the messages implicit in the government’s increasingly close regulation of schools participating in federal loan *423 programs. [FN288] The federal employees who draft pages upon pages of such regulations must be amused by Brunner’s assertion that the government has no interest in the quality or relevance of the education it is funding. [FN289] If that were correct, the government would be indifferent between setting up a loan program for students and a loan program for gamblers, and there would be no special exception to discharge. Contra Brunner, the educational loan programs are an investment in the nation’s future, and are expected to bear fruit.

Benefit of the Education: The Bankruptcy Commission

The Bankruptcy Commission, commencing the effort to devise a student loan exception to discharge, did not exhibit Brunner’s views. The Commission found the results of the education significant, as indicated in this passage:

[A] loan or other credit extended to finance higher education that enables a person to earn substantially greater income over his working life should not as a matter of policy be dischargeable before he has demonstrated that for any reason he is unable to earn sufficient income to maintain himself and his dependents and to repay the educational debt. [FN290]

The Commission could have phrased this more clearly. It raises two questions of interpretation: (1) If the education has enabled the debtor “to earn substantially greater income over his working life,” then how is it possible that he may still be “unable to earn sufficient income to maintain himself”? The Commission presumably meant to say, “If the financed education would enable a typical graduate to earn substantially greater income, then this debtor needs to explain why, after getting that education, s/he cannot pay his/her bills.” [FN291] This question could fairly be answered by either an attack on the premise (i.e., an argument that this was not an education that would produce substantially greater income for the average graduate) or by an indication that the debtor was not a typical graduate (e.g., that s/he performed poorly in that particular school). [FN292] (2) What does the phrase “for any reason” signify? Without it, the excerpt would say, clearly enough, that the debtor must demonstrate that he cannot pay his bills. “For *424 any reason” seems to emphasize that the debtor must merely demonstrate a reason; [FN293] by definition, one would expect it to be “reasonable,” but there is no requirement here that it must reflect great prudence. [FN294]

In this light, one finds it scarcely believable that the court in Brunner considered itself consistent with the Commission’s Report and quoted from it at length. [FN295] Few things are less compatible than Brunner’s declaration that the value of the education is irrelevant versus the Commission’s specific interest therein, or Brunner’s placement of the burden of proof on the debtor versus the Commission’s placement on the creditor. [FN296]

The excerpt’s awkward wording suggests that, among the many pages in the Commission’s Report, the page addressing the student loan exception to discharge did not command great attention. Indeed, the Report blunders on to a rather obvious error on another point on that same page. [FN297] Similarly, Congress signalled its inattentiveness when it failed to notice the “gap” period between its repeal of the prior statute and the enactment of § 523(a)(8) [FN298]-not to mention its miscomprehension of the virtually nonexistent student bankruptcy problem, [FN299] its indifference to the vagueness of the resulting undue hardship standard, [FN300] and the confusion evident in and engendered by the legislative history. [FN301] One cannot help imagining some link between this track record and the serious lack of political and financial clout among the victims.

Benefit of the Education: Conclusion

If the education and its financing so obviously fail to accomplish a meaningful end that, besides being unemployed in the field that s/he studied, the debtor becomes bankrupt, then the debtor’s ability to repay the *425 loan is not obviously relevant in deciding whether repayment would impose an undue hardship. In most such cases, the school probably bears some responsibility for such an outcome. Since the student’s entire life can be damaged by the result, it seems only reasonable to suggest that the resourceful debtor (who may eventually be able to find some other way of making a living) should be encouraged to direct the fruits of his/her labors to a productive future, not to the support of a past, unproductive educational institution or process.

The factors discussed here, including not only the benefit of the education but also the number of years since graduation and the percentage of educational debt in the debtor’s total debt, [FN302] do not require a shift of the burden of production from creditor to debtor. The creditor should have little difficulty in assembling the relevant facts, relying upon the schedules that comprise the filing, [FN303] direct access to school records where necessary and appropriate, and information obtained during the collection effort, supplemented by pretrial discovery-which the creditor, unlike most debtors, [FN304] has the ability to undertake. [FN305] Thus, even within the undue hardship inquiry, it should frequently be possible, and preferable, to reach a decision on discharge without unjustly burdening the frequently pro se debtor or engaging in a demeaning, picayune analysis of the debtor’s expenditures. [FN306]

Financial Factors

When dealing with matters that are only partially or not at all numerical, as in the foregoing paragraphs, the court’s concept of “undue” hardship may involve relatively vague, equitable reflections, as though relying on such synonyms as “unwarranted” or “inappropriate.” [FN307] In cases calling for an examination of the debtor’s finances, however, somewhat greater precision *426 may be attainable. [FN308] Such an examination is appropriate, not as a standard course of action, but as a last possible means of finding undue hardship when the debtor’s circumstances do not allow the swift conclusion that s/he is innocent of the targeted abuse. [FN309] This might occur, for instance, where the debtor is a recent graduate with a good income from a job in the field for which s/he trained. [FN310] The following paragraphs consider the practical steps required for an examination of such a debtor’s ability to pay.

Common Starting Point: Bankruptcy Commission Report

Most of the leading decisions on undue hardship have directly [FN311] or indirectly [FN312] relied, at least in part, upon the following excerpt from the Bankruptcy Commission Report:

In order to determine whether nondischargeability of the debt will impose an “undue hardship” on the debtor, the rate and amount of his future resources should be estimated reasonably in terms of ability to obtain, retain, and continue employment and the rate of pay that can be expected. Any unearned income or other wealth which the debtor can be expected to receive should also be taken into account. The total amount of income, its reliability, and the periodicity of its receipt should be adequate to maintain the debtor and his dependents, at a minimal standard of living within their management capability, as well as to pay the educational debt. [FN313]

One notes, first, that the Commission’s determination of undue hardship, as set forth in that text, was almost entirely a matter of income. This was consistent with the concern that the recent graduate might have a bright earnings future ahead and with the reference, in the Commission’s draft *427 statute, to “payment from future income or other wealth.” [FN314]

There was nothing hostile to the debtor in this. On the contrary, the Commission’s emphasis on income underscored its concern that the honest debtor should have enough to live on. The debtor’s resources were to be estimated “reasonably.” The focus was upon the amount of income that could be “expected”- not the highest optimistic projection-and its “reliability.” [FN315] In light of the statement that the income “should be adequate,” one cannot justify reducing potentially productive college graduates to circumstances that might diminish their future productivity. [FN316] The Commission’s reference to a minimal standard of living seems intended, in context, to indicate that s/he should have atleast, not at most, that much.

The excerpt said little about the expense side of the equation because expenses were not the issue. It was not anticipated that courts would scrutinize a debtor’s weekly budget dollar by dollar, [FN317] imposing their subjective judgments upon the debtors’ own ways of living their lives, [FN318] in hopes of squeezing out a bit more for debt repayment. No doubt some debtors (rich and poor alike) waste their money, and perhaps a budget would help them. A judge may be able to spend less on a given item than the student loan debtor. But in the Commission’s view, that was not germane. The Commission’s guideline was the debtor’s own “management capability.” [FN319] One readily acknowledges that fraudulent debtors could present inflated budgets, and it does seem wise to refer to an objective guideline for a rough idea of what total expenses should be. [FN320] But one reasonably fears the opposite extremes to which overzealous courts eagerly run when such respect for debtors is under-emphasized. [FN321]

Finally, a creditor might interpret the Commission’s draft as prohibiting review of non-financial factors. In reply, one notes that the draft’s reference *428 to payment of the debt from “future income or other wealth” [FN322] was echoed in a Senate bill [FN323] but was excluded from the final version, indicating that Congress specifically considered and rejected such an income- specific approach. [FN324] The elimination of such language may weaken the foregoing Commission text as direct authority on § 523(a)(8)(B), in the sense that Congress rejected its income-specific perspective and opened the door to non-financial factors; but it does not lessen the force of the argument that, for nearly two decades, courts enforcing a harsh financial standard in the name of the Commission, originator of the undue hardship phrasing, have misconstrued its plainly pro-debtor intent.

Calculating the Ability to Pay

The calculation of the debtor’s ability to repay the student loan, when such calculation is necessary, requires a comparison of what the creditor expects to receive and what the debtor can pay. The following paragraphs address both sides of the comparison.

(1)What the Creditor Demands. The creditor’s expectation is, of course, a matter for the creditor to set forth and justify. It requires the creditor to state the total amount due, with all fees, costs of collection through trial, and interest, and the period of time over which that total must be repaid. [FN325]

The total amount and the time period are interrelated, since the amount of future interest that the debtor must pay, if s/he makes payments as scheduled, depends upon the length of the repayment period. The simplest approach would be to assume that a debtor after bankruptcy would ordinarily need to stretch the payments out over the maximum period of repayment allowed under the loan agreement and relevant statutes and regulations, [FN326] especially where the loan agreement provides that the debtor can prepay without penalty. A creditor attempting to show an absence of hardship would presumably concur in calculations based on the longest permissible repayment period, so as to make each month’s payment as small as possible; but the creditor should not now be allowed to disavow a larger monthly demand upon which it showed no pre-petition flexibility andwhich may have been partly responsible for the debtor’s decision to file bankruptcy. [FN327] The court should not invent extensions or postponements of *429 the maximum repayment period, as some have done, [FN328] to find another solution more advantageous for the creditor but inconsistent with the executed loan agreement. [FN329]

Given the creditor’s duty to exercise diligence in loan collection, [FN330] the court should presume that the portion of the repayment period that elapsed before bankruptcy was a period during which the creditor was vigorously extracting as much as the debtor was able to pay. [FN331] Thus, the maximum repayment period should be shortened by that elapsed portion. [FN332] To avoid penalizing the creditor for granting authorized deferments, and in the interests of consistency between the two subsections of § 523(a)(8), the repayment period should not be shortened by any period that would constitute an applicable suspension under § 523(a)(8)(A). [FN333]

If, however, the loan’s history shows that the creditor has granted a deferment or forbearance based specifically on hardship, [FN334] the creditor should explain why such grant was not an admission that the debtor was experiencing statutory undue hardship during those periods. Any other approach risks putting the debtor into a perpetual twilight of hardship with no resolution. [FN335] The debtor’s failure to seek, or the creditor’s failure to *430 grant, such a deferment or forbearance should not be determinative for this purpose; [FN336] rather, given the hardship context, the analysis should recognize the treatment for which the debtor was qualified. [FN337]

Once the creditor decides what it believes are the number of monthly payments remaining and the total of all amounts to be paid, the creditor will be able to state the monthly payment it demands to satisfy the debt. [FN338] If there exists some reason to doubt that the creditor has committed itself to that monthly figure, the presumed monthly payment should be based, instead, on the lender’s option to accelerate all amounts due and seek the maximum legal garnishment. [FN339]

(2)What the Debtor Can Pay. In the second half of the ability-to-pay analysis, the creditor’s mission is to prove that the debtor has a monthly surplus, of income over expenses, sufficient to cover the required payment.

In Bankruptcy Commission terminology, the income calculation should be based on an estimate of reliable income and should provide for at least a minimal standard of living within the debtor’s management capability. [FN340] In terms that articulate the overriding purpose of returning the debtor to productivity, the income calculation should take into account the need to restore his/her self-respect and ability to live in line with the values and expectations of mainstream American culture. [FN341] If the debtor’s income history has fluctuated, a cushion should be allowed for the bad months. [FN342] The income estimate should be based on a standard workweek, giving the debtor an incentive to work overtime to get ahead, rather than requiring *431 overtime that cannot and probably should not be maintained over a period of years. [FN343]

The expense calculation should not penalize the debtor for spending an above- average amount on one portion of his/her budget unless it also rewards him/her for spending a below-average amount onanother. That is, the court should not become bogged down in such questions as whether a debtor’s budget displays a prudent balance of spending and saving, or whether the debtor could spend less on food or more on clothing. [FN344] The important thing is that, as courts have long contemplated, [FN345] the overall expense figure, applied as the debtor sees fit, should be generally in line with an objective measure of the cost of a frugal-to-moderate lifestyle for a similarly situated typical household. [FN346] For such purposes, one might contrast the official poverty levels against the average expenditures of a typical American household. [FN347]

*432 Finally, if the creditor contends that the repayment period must continue to a point in time when it obviously conflicts with the debtor’s need to save for retirement or for his/her children’s college years, [FN348] the creditor should show that the monthly payment will not interfere with those other unavoidable needs. Similarly, the creditor’s demand cannot survive if it ignores nondischargeable debts [FN349] or other extraordinary items disclosed by the debtor, in his/her present circumstances or in the reasonably anticipated future, for which the objective expense standard makes no allowance. [FN350]

*433 c. Financial Factors Summarized

The debtor’s ability to pay is most likely to be relevant in a case where the debtor obtained a decent education, graduated recently, has obtained a job in the field of study, and lacks significant noneducational debts or other reasons for filing bankruptcy. In such a case, under the statute in its present form, one might ask, with the Bankruptcy Commission, [FN351] for a reason why the debtor will not earn enough to maintain an adequate lifestyle while repaying the student loans.

If a particular case depends entirely upon the ability to pay, it seems unavoidable that (a) if there will be a reliable income surplus equaling or exceeding the amount the creditor demands, discharge should be denied; and (b) if there is no surplus at all, discharge should be granted. Between those two extremes, if there is an income surplus, but not necessarily enough to pay what the creditor demands, some courts would arbitrarily restructure the debt; [FN352] but that practice would seem inappropriate where the statute is being construed strictly in the debtor’s favor. [FN353] As things stand in the majority of cases at present, the debtor upon whom the courts have conferred the rare status of undue hardship may prefer to oppose the *434 controversial restructuring practice [FN354] and may insist upon the all-or-nothing alternative-assuming, of course, that such a debtor has the resources required to seek such a determination.

Practical Limits on the Debtor’s Ability to Carry a Burden of Production

The preceding pages have relied on the general sense that the burden of production should remain on the creditor until good reason appears to shift it to the debtor. There are particularly compelling reasons to hesitate before shifting the burden of production to bankrupt student debtors. Quite apart from any question of mercy, society does not benefit from a search for truth and efficiency that places the duty of going forward on a party unable to do so effectively. [FN355]

Student loan debtors must frequently proceed without the assistance of counsel, [FN356] whose fees they frequently cannot afford [FN357]-and which, if paid, *435 could be used as evidence against a claim of inability to pay. [FN358] Represented or not, such debtors are a peculiar group, of whom a disproportionate number display significant inabilities that their educations were evidently not able to overcome, including the inability to recognize and demonstrate their own present and future needs. [FN359]

One might reasonably hesitate before requiring such a debtor to have the confidence that s/he alone can make a strong showing of undue hardship in a court of law that probably seems unfamiliar, unsympathetic, and perhaps even hostile, [FN360] against a trained adversary backed by the litigation resources *436 of a bank or governmental agency. The risks imposed by such a requirement must frequently seem prohibitive to the debtor who, although believing that s/he has a valid case, must consider the likelihood that s/he will incur substantial additional liability for his/her adversary’s litigation expenses, pursuant to the student loan agreement, if s/he loses. [FN361] One may find it surprising, under the actual circumstances of most cases, that a court could consider it just to place the burden upon the debtor.

Summary: Allocating the Burdens

This article has suggested, so far, that § 523(a)(8)(B) does not create a rationale requiring a shift of the burden of persuasion from the creditor to the debtor, and that the burden of producing evidence, which generally rests upon the party having the burden of persuasion, should begin with the creditor on all aspects of § 523(a)(8)(B), including undue hardship. Although certain circumstances may suggest that the burden of production could be shifted to the debtor, the realities of the parties’ respective situations in most student loan discharge cases strongly encourage keeping the burden upon the creditor.

With this allocation of burdens, the creditor’s task will be to demonstrate, first, that the disputed debt qualifies for the special protection conferred by § 523(a)(8), and second, that requiring repayment would impose no undue hardship upon the debtor. The latter point requires evidence that the debtor fits the profile of the abusive debtor whom Congress targeted and that s/he can in fact repay the loan.

By making this showing, the creditor will provide the valuable service of weeding out the frauds-without simultaneously depriving society, and its honest but unfortunate debtors, of the future productivity that a fresh start can bring. Moreover, if the creditor’s showing is based upon objective expense guidelines like those recommended here, the creditor will remove from bankruptcy courts the demeaning task of invading and critiquing the petty expenditures of some of America’s humblest citizens.

STANDARD OF PROOF

In student loan discharge litigation, the scarcity of references to the standard of proof governing the creditor’s burden of persuasion may suggest that that standard is abstract or tangential. To make it more concrete, the discussion turns, here, from the foregoing emphasis upon points that *437 debtors should assert and courts should consider, to a greater focus upon how the leading cases do handle student loan discharge cases. [FN362] It is submitted that, among the many reasons for conflicting judicial opinions, the standard of proof lies at the core of the “major disparity. . . in the various courts’ interpretations of the term ‘undue hardship.”‘ [FN363] That is, the following discussion shows that, regardless of which party must bear the various burdens, an adjustment of the standard of proof now used in the majority of student loan cases could, by itself, make a considerable difference in the outcome.

Extreme vs. Moderate Hardship Standards: Kohn versus Grogan

It may seem obvious that a preponderance standard of proof, which produces “a roughly equal allocation of the risk of error between litigants,” [FN364] would be incompatible with a requirement that either party must show that a given claim or fact is certain, or even highly likely. [FN365] Yet there exists a longstanding [FN366] disagreement among courts on the question of whether undue hardship means guaranteed or certain hardship, with most insisting that it does.

The Hopelessness Requirement

Shortly after § 523(a)(8) became law, Judge Roy Babitt in the Southern District of New York decided the case of NYSHESC v. Kohn, [FN367] in which he opined that:

Congress meant the extinguishment of student loans to be an available remedy to those severely disadvantaged economically as a result of unique factors which are so much a part of the bankrupt’s life, present and in the foreseeable future, that the expectation of repayment is *438 virtually non-existent unless by the effort the bankrupt strips himself of all that makes life worth living. [FN368]

This language, taken at face value, would treat undue hardship discharge as a suicide-prevention device. Judge Babitt developed this remarkable interpretation after repeatedly noting that he could find virtually no guidance on the proper construction of “undue hardship;” [FN369] that “[c]ases in other areas of the law are of slight help;” [FN370] that the Bankruptcy Commission Report was “difficult of application;” [FN371] and that, of the two relevant congressional hearings he reviewed, one was “slightly more illuminating” than the other. [FN372] Clearly, the authorities failed to say what it seemed that they should say on the subject. Judge Babitt did pen the foregoing words; but he evidently disliked what he had wrought, and in the end he had unflattering words for the entire enterprise. [FN373]

From that brilliant beginning, the New York City gloss on undue hardship was further refined when another Southern District judge ruled, in Briscoe v. Bank of New York, that undue hardship does not exist unless there is a “certainty of hopelessness, not simply a present inability to fulfill financial commitment.” [FN374] Building upon that view, other courts have indicated that discharge should not be granted if the debtor is experiencing mere “garden-variety hardship.” [FN375] Rather, the debtor must show that s/he is suffering from truly severe, and even uniquely difficult, circumstances that cannot foreseeably improve during the longest period of time allowed *439 for loan repayment (typically, the following ten years). [FN376]

Finally, in what would become the leading Brunner case, Judge Haight of the Southern District of New York adopted this view, which he admitted was “draconian,” [FN377] because he felt that “enlightened social policy” necessitated it. [FN378] In his words, this enlightened view (which, as discussed in greater detail infra, [FN379] became step two of the three-step approach to undue hardship affirmed by the Second Circuit [FN380]) requires the debtor to prove circumstances that “strongly suggest” that his/her present impossibility of making payments will continue for a significant portion of the loan repayment period. [FN381]

Thus, under Brunner, the debtor must bear a “very difficult” burden of proof [FN382] regarding “unpredictable” changes in future expenses and “even more problematic calculation[s] of future income.” [FN383] Although some moderating language does appear in Brunner and in some of the cases following it, [FN384] it is nevertheless clear that Brunner requires the debtor to provide a “reliable guarantee of undue hardship” [FN385] and to prove a “certainty of hopelessness.” [FN386] This requirement of hopelessness sets the stage for much of what follows, both in this article and in the case law.

The Moderate Standard

Courts espousing the foregoing extreme standard do not describe it as a standard of proof. Yet it must be, in some sense, because it is patently incompatible with the preponderance standard. An attempt to combine the two would produce what one might call the “hopeless preponderance” standard: absurdly, the debtor would have to show that, more likely than not, s/he is certain to experience long-term financial hopelessness. Simply *440 put, there can be no “roughly equal allocation” of the risk of error” [FN387] when the debtor must prove that there is not a single possibility of hope in his/her future. [FN388]

It is not clear why this point has not attracted the attention of the courts. Even if one grants Judge Babitt’s dubious excuse that the legislative history was indistinct when he wrote in 1979, it remains true that the hopelessness requirement has long since become plainly incompatible with the congressional intent manifested elsewhere, in several ways.

First, Congress has implied that it did not expect undue hardship to require debtors to make the ultimate sacrifice. Specifically, 42 U.S.C. § 254o(d)(3) provides that certain loans to medical students are dischargeable only if nondischarge would be “unconscionable.” This requirement is more stringent than that of undue hardship. [FN389] But if undue hardship requires a long-term certainty of hopelessness, it is difficult to imagine what additional distress an unconscionability test could require. [FN390] More generally, undue hardship in other statutes is a moderate measure that requires the courts to balance relevant factors. [FN391]

Second, certain provisions of the Bankruptcy Code show that Congress gave student loans less than the highest possible protection. In particular, such loans are not granted priority status under 11 U.S.C. § 507, [FN392] nor are they singled out for prevention from subsequent discharge under § 523(b). [FN393] Nor did Congress state a presumption against the debtor in § 523(a)(8)(B), *441 as it did in § 523(a)(2)(C). [FN394] Construing undue hardship as a harsh barrier to the debtor under § 523(a)(8)(B) is also inconsistent with the highly protective treatment that “undue hardship” accords him/her under the very next section of the Code, in § 524(c)(6)(A)(i). [FN395]

Finally, the statutes governing ordinary student loan repayment under Title 20 impose radically lighter payment expectations [FN396] and are far more considerate of debtors’ situations [FN397] than are courts applying a hopelessness analysis under § 523(a)(8)(B), where judicial zeal in seeking loan repayment may extend to the point of violating fundamental personal rights. [FN398]

*442 3. The Preponderance Standard in Context

When creating the student loan exception to discharge, the Bankruptcy Commission contemplated that the burden of persuasion would be on the creditor, not the debtor. [FN399] The Commission recognized that such an exception was a change from automatically granting discharges “as a matter of policy.” [FN400] Under this new approach, creditors would have an opportunity to prove nondischargeability.

The idea that discharges should be rare is a great leap beyond the Commission’s recommendation and the congressional concern with a small number of bankruptcy abusers. [FN401] Indefensibly, this leap, expressed in the hopelessness requirement, denies a fresh start as long as there really exists a possibility that the debtor would be capable of making a fresh start. [FN402] Such a doctrine of despair is, doubtless, the definitive distortion of the debtor’s duty. Seeing how eagerly the majority of courts have exceeded the intent of Congress and how harshly they have come down against debtors, one cannot be surprised that the National Bankruptcy Review Commission (“NBRC”) [FN403] recommended to Congress, in 1997, that the student loan *443 exception to discharge in § 523(a)(8) be repealed entirely. [FN404]

“Complex” vs. “Simple” Standards: Johnson versus Bryant versus the Case-by- Case Approach

The following paragraphs show that undue hardship decisions in the late 1970s and early 1980s developed several different structures or methods by which to assess various aspects of debtors’ affairs. Admittedly, this analysis of factors might fit in the discussion of the burden of production in section V of this article. [FN405] It is placed here, instead, for two reasons. First, it may be informative to review these historical examples in closer proximity to the more recent opinions that will be reviewed in section VII. [FN406] Second, such structures may be taken too seriously if one studies them out of context. As the foregoing subsection A of this section implies (and as section VII will develop more fully), the choice of weapon may not be half as important as the degree of righteous zeal with which it is wielded against the debtor. That is, judicial willingness to construct such edifices and usher the debtor through them would seem to depend directly upon judges’ views of how heavy a weight the accused debtor should bear. Hence, it has seemed advisable to present this material here, following the review of the standard of proof.

Johnson [FN407]

One week after Judge Babitt’s decision in Kohn, [FN408] in the Eastern District of Pennsylvania, Judge Thomas Twardowski created a grand structure that would become the foundation for most of what followed in the effort to determine undue hardship.

Judge Twardowski began by assuming that a direct search for the meaning of “undue hardship” would have to be limited to dictionary definitions and would thus be of “marginal utility.” [FN409] The judge opted, instead, to devote nine pages to the invention and explication of a three-test approach, involving a “mechanical test,” a “good faith test,” and a “policy test,” each containing numerous sub-points. [FN410]

*444 Unfortunately, the Johnson tests proved to be complicated and tangled from the outset. [FN411] Numerous courts, including most federal courts of appeals ruling on undue hardship, have revised the tests, or their relationships to one another, or have opted to apply only selected portions of the Johnson approach, or have completely rejected it for various reasons. [FN412]

Perhaps the most important legacies of Johnson are its theories that it is appropriate to apply multiple tests for undue hardship to the debtor; that these tests should require the debtor to prove inability to pay (via the “mechanical” test and, to some extent, the “good faith” test) before other issues are considered; and that, at least for the debtor who appears unable to pay, the court should inquire into other issues, including the benefit received from the education and the percentage of student loan debt. [FN413]

Bryant [FN414] and the Case-by-Case Approach

The Eastern District of Pennsylvania, like the Southern District of New York, has exercised disproportionate influence on undue hardship law, perhaps because of the large numbers of cases involving guarantors PHEAA *445 and NYSHESC. [FN415] Eight years after the Eastern District produced Johnson, Judge David A. Scholl of that district developed a second methodology. Commenting that Johnson required “conjecture and speculation” and led to “conflicting and inequitable results,” [FN416] he set out to create an “objective test” that would minimize the court’s “making moral judgments as to the appropriateness of expenditures by debtors.” [FN417]

Judge Scholl selected the federal poverty level [FN418] as the dividing line for his objective test. [FN419] He indicated that an income below that level would result in a discharge unless the creditor proved that it should not, [FN420] while an income above that level would require the court to review the customary “myriad of facts and circumstances” in search of “extraordinary” or “unique” factors justifying a discharge. [FN421] Unfortunately, aside from the fact that this supposedly simple test thus required a detailed investigation of all above-poverty debtors, the poverty bright line proved to be less clear-cut in application than it might have seemed in concept. [FN422]

Judge Scholl set his dividing line at the poverty level, which he considered “extremely grim,” [FN423] only because the debtor had a relatively easy *446 student loan discharge alternative under Chapter 13. [FN424] But when that easy alternative was eliminated by revision of the statute in 1990, [FN425] Judge Scholl announced his intention to revise the “rather strict rule” of Bryant. [FN426] The revision never happened, though; instead, the judge sang Bryant’s requiem in Mayer v. PHEAA. [FN427]

Some courts followed Bryant, [FN428] but many others have considered and rejected it, [FN429] preferring either to follow some other structured approach [FN430] or to reject all such structures in favor of a “totality of circumstances” or “case-by-case” approach. [FN431] The case-by-case method deprives the parties of the so-called “standard” that a structured approach might provide; but one should not ignore the fact that, regardless of the approach used, courts in this area do not necessarily apply, in practice, even the authorities upon which they claim to rely in principle. [FN432] In light of this article’s recurrent *447 argument, supra, that the creditor should carry far greater burdens than courts typically assign, perhaps the best assessment of the results achieved by the Johnson, Bryant, and case-by-case approaches is that it can be difficult to do the wrong thing well.

VII. CURRENT LEADING CASES

Having examined some of the principles that affect the decision of undue hardship cases, it may be helpful to review several appellate decisions that now provide primary guidance on the determination of undue hardship. While space does not permit a full exploration of the many ways in which reallocating and redefining the burdens and standards of proof might have made a difference in these cases, it may be possible to provide some flavor of that difference by concentrating, in each instance, upon a few elements that stand out.

The Majority View: Brunner, Roberson, and Faish

In PHEAA v. Faish, [FN433] the bankruptcy court for the Middle District of Pennsylvania opted for a modified Johnson approach, which the Third Cir-cuit Court of Appeals then rejected [FN434] in favor of the draconian [FN435] approach invented by Judge Haight in Brunner v. NYSHESC, [FN436] as affirmed by the SecondCircuit [FN437] and subsequently adopted by the Seventh Circuit in Roberson. [FN438]

Brunner is important, not only for its views on the issues of benefit-of-the- education [FN439] and standard of proof [FN440] that this article has already examined, but also for the resulting method by which it determines undue hardship. Judge Haight’s approach requires the debtor to make

a three-part showing: (1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for her-self and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student *448 loans; and (3) that the debtor has made good faith efforts to repay the loans. [FN441]

In cases following Brunner, as in Johnson, the inquiry may stop as soon as the debtor fails any of the tests. [FN442] The following pages look, chronologically, at the Second, Seventh, and Third Circuits’ applications of this approach to undue hardship.

Brunner

The three-step Brunner approach just quoted contains some features that courts had used previously. For example, the Johnson mechanical test survived, modified, in the first two steps of Brunner, and Brunner’s third step partially echoes the Johnson good faith test. [FN443] This article has already examined the essential elements of those first two steps and will return to the second step later; [FN444] here, the inquiry turns to Brunner’s third step, which imposes a requirement of “good faith.”

Although the fact does not seem to have received much attention, Johnson admitted (inadvertently, it seems) that it overshot the mark when it devised its own good faith test: the opinion stated that a debtor failing that test would be denied discharge even if actual undue hardship had been proved. [FN445] Unfortunately, Judge Haight in Brunner evidently did not notice that questionable origin. Instead, in words evoking Judge Babitt, [FN446] he deemed the test appropriate despite the fact that there was “no specific authority for this requirement” other than the presumed “need for some showing of this type” which, in turn, had to be “inferred from” the Bankruptcy Commission Report-whose authority, to go one step further, was assumed only because of “the absence of any contrary indication” by Congress. [FN447]

In applying his enlightened good faith test to the facts of the Brunner case, Judge Haight denied discharge to a debtor whose “counsel [had] apparently deserted her” and for whom no brief was filed. [FN448] Specifically, the court found bad faith in the timing of her bankruptcy filing, which occurred one month after the loans came due, and stated that a debtor *449 experiencing hardship should request a deferment from the lender before taking the more drastic step of filing bankruptcy. [FN449]

To pause at that point, one might note that the reference to deferments raises more issues than Brunner acknowledges. Granted, the sophisticated debtor will sometimes find it wise to negotiate with a creditor, or at least to appear to be negotiating-even if the creditor does not initiate such negotiations [FN450]-and a request for a deferment could be part of such a strategy. Or, looking at it from the other side of the table, the requirement of seeking a deferment discriminates against the unsophisticated debtor, whose unreasoning response to an anxiety-producing collection effort may be to hide from the creditor rather than seek a deferment-especially if s/he thinks that the creditor is calling solely for the purpose of getting money that s/he does not have. To state the obvious, deferment requests and fraudulent intent are not firmly related, either directly or inversely, and a requirement ignoring that fact is necessarily mistaken. It may make sense to negotiate, and a debtor who fails to do so may only be hurting him/herself; but a court that requires negotiation as evidence of good faith is essentially shirking its duty to determine whether repayment would impose undue hardship.

Looking more closely at this deferment issue, one sees that the law provides numerous grounds for deferments, potentially continuing for many years, [FN451] and that each is an “applicable suspension” under subsection (A). [FN452] Thus, Judge Haight would require a debtor, possibly experiencing considerable hardship but failing to qualify for discharge under § 523(a)(8)(B), to postpone the day when s/he might instead qualify under § 523(a)(8)(A). This reasoning might be extended, by another court, to include forbearances, which can go on for many additional years [FN453] and which some courts construe, like deferments, as applicable suspensions. [FN454] Thus, while the debtor may be able to secure deferments or forbearances and thereby satisfy this one aspect of Brunner, [FN455] the difficulty of meeting all *450 of Brunner’s requirements for discharge [FN456] may yield the conclusion that the most practical approach is, instead, to ignore the offer of a deferment or forbearance and “tough it out” for whatever remains of the seven-year period (five years, at the time of Ms. Brunner’s case) under § 523(a)(8)(A). [FN457]

One may initially share the district court’s negative reaction to the fact that Ms. Brunner filed for discharge within a month after her loans first came due. [FN458] But the grace period, whose expiration would set the due date, could last as long as a year after graduation. [FN459] During that time, the debtor might be frantically hunting for work, and a bankruptcy filing when the loans finally come due might imply no unseemly haste. In Ms. Brunner’s case, bankruptcy came seven months after graduation, [FN460] and the facts indicate that, by then, she had been hunting for a job in her field for some time and had become thoroughly familiar with her prospects: her undergraduate degree was in psychology and her master’s degree was in social work; it had taken a decade of part- and full-time study to earn those degrees; during those ten years, she had never earned more than $9,000 annually; she had sent out over a hundred resumes without finding work in her field; and at the time of trial she had been receiving public assistance for four months. [FN461] Judge Haight acknowledged that, far from being a bankruptcy abuser about to commence a lucrative career, she was unlikely to find a job in herchosen field of work in the near future; the basis for his reversal was simply that there was insufficient evidence to prove that she was unable to find “any work at all,” [FN462] even though she testified that she had “applied for any position that [she] could find.” [FN463]

Under the Brunner approach, the question of good faith is limited to such matters; it is supposedly unnecessary to apply the portion of the Johnson policy test that asks what percentage of the total debt is attributable to student loans. [FN464] Yet how does the court determine whether educational debt was the primary reason for filing bankruptcy? Surely it would be *451 nonsensical to recommend deferments to a debtor whose principal reason for filing bankruptcy is that s/he is hounded by non-educational creditors. [FN465]

That is, the question returns: why is the debtor filing bankruptcy? One cannot easily suppress the question of motive when applying a statute that sprang from a congressional fear of debtors with bad intent. It appears that the court may be doomed to ask that question; perhaps the court’s flexibility is limited to the choice of how to phrase it. The court might inquire into the percentage of debt; it might invent a good faith test with the counterproductive complication of having to ask why the debtor did not seek deferments; or it might remain focused upon the perceived congressional goal of “distinguish[ing] between individuals who have contrived to secure an unjust enrichment through the operation of the bankruptcy law and those who have realistically fallen on hard times and who deserve the benefits of the general ‘fresh start’ policy of the Act.” [FN466] Criteria already discussed [FN467] may assist in the search for those who seek an unjust enrichment; but deferments and the other good faith baggage of Brunner do not. [FN468]

Roberson

Brunner’s second test required the debtor to show that his/her difficulty was likely to persist for a significant portion of the repayment period. [FN469] The meaning of this requirement became clearer when the Seventh Circuit adopted Brunner’s reasoning in In re Roberson. [FN470]

Mr. Roberson entered college on a part-time basis in 1980, and graduated in May 1986 with a degree in industrial technology. [FN471] He never obtained a job in that field, nor any financial benefit from his degree, because he earned more by staying at his prior job as an assemblyline worker. [FN472] He began making payments on his student loans (presumably after the expiration of the grace period, sometime around the end of 1986), and continued doing so for approximately three years. [FN473] In 1989, his marriage *452 and job situation deteriorated. [FN474] In January 1990, he received his second conviction for drunk driving; [FN475] as a result, his driver’s license was revoked and could not be reinstated until sometime in 1993. [FN476] He was laid off in February 1990, and his divorce was finalized in April 1990. [FN477] His wages in 1990 were $2,846, and at the time of trial in 1991 they were zero, despite his best efforts to find employment. [FN478] He was jailed for three months in 1991, apparently because he was unable to make child support payments. [FN479] His ex-wife was awarded possession of their house, and at the time of trial, he lived in a $40-per-week rented room with no private bathroom or cooking facilities. [FN480]

The bankruptcy court applied the Johnson approach [FN481] and found, under the mechanical test, that Mr. Roberson had minimal present resources and also that, because he had no driver’s license and had carpal tunnel syndrome and back problems, his prospects for employment within the next few years were minimal. [FN482] The court found that he also passed the good faith test, given these factors: he had made serious efforts to obtain employment and to minimize expenditures and maximize resources, he did not file bankruptcy for the dominant purpose of eradicating student loans, and he had not benefited financially from the education. [FN483] The court decided, however, that he failed the policy test because of the possibility that he might receive some future financial benefit from his education. [FN484] Thus, the court gave him a two-year post-trial “deferment,” expiring on Dec. 11, 1993, to let him get back on his feet, before his duty to make payments would resume. [FN485]

The district court reversed and granted discharge, construing Johnson as requiring no policy test when the debtor satisfies the mechanical and good faith tests. [FN486] The Seventh Circuit reversed again, rejecting Johnson in favor *453 of Brunner; agreeing with the bankruptcy court (under Brunner’s second step) that the bleakness of the debtor’s situation might be temporary; and noting that the debtor could file a motion in the bankruptcy court to reopen his case if he was still experiencing hardship when the bankruptcy court’s judicial deferment expired in December 1993. [FN487]

The Seventh Circuit reached this opinion by agreeing, with Brunner, that the analysis of future income potential under Brunner’s second step [FN488] requires a certainty of hopelessness. [FN489] The opinion demonstrates two things about that requirement. First, it shows that, since hope is almost always possible, the best that the court can do for a debtor experiencing pronounced hardship may be to give him/her an unauthorized judicial deferment; [FN490] revisit the situation again in a few years, to see whether a glimmer of hope has arisen by then; [FN491] and if not, allow him/her to try *454 again. [FN492] Second, it shows that the hopelessness requirement is such a clear, simple guide that it must overrule all other authorities, including logic. How else can one explain the Seventh Circuit’s conclusion that Mr. Roberson had not shown that he suffered from “the type of barrier that would lead us to believe he will lack the ability to repay for several years”? [FN493] His driver’s license suspension evidently ran for three years by itself, and it was not the only source of his hardship. [FN494] At the expiration of the judicial deferment in December 1993, nearly four years would have *455 passed since he lost his job, and he would evidently be entering the eighth year of a ten-year loan repayment period. [FN495]

Finally, the Seventh Circuit stated that the third step of a full Brunner analysis, addressing the issue of good faith, would embrace the Bankruptcy Commission’s question of whether the debtor’s inability to repay is “because of factors beyond his reasonable control.” [FN496] The court interpreted that question as indicating that discharge must be denied if the default resulted from the debtor’s negligence or irresponsibility in conducting his/her financial affairs. [FN497] It would seem, then, that the Supreme Court [FN498] must have meant to limit the fresh start to the honest but unfortunate-but fiscally prudent-bankrupt. By the lights of Roberson, bankruptcy, like so many other things in life, is most sought by those who are least qualified for it. [FN499]

Since Mr. Roberson was a failure at bankruptcy court under the first two steps of Brunner, the Seventh Circuit did not reach the good faith question in his case. [FN500] To illustrate its thinking on that question, however, the court did cite Perkins v. Vermont Student Assistance Corp. [FN501] for the proposition that buying a new car was a self-imposed hardship. [FN502] The “new” car in Perkins was, in fact, a used Ford Pinto costing $3,325; [FN503] and while one may share the court’s opinion to the extent that it addressed that particular model of automobile, the more general principle must be that a debtor who expects to continue earning an income over a repayment period extending for a number of years will probably need to spend a considerable amount on transportation, be it for a new car, a used car plus repairs, or bus fare. [FN504] Again, one senses diminishing returns from judicial micromanagement of debtors’ personal finances. [FN505]

Faish

The Third Circuit’s decision in PHEAA v. Faish [FN506] broke little new ground; but since others have cited it as authority, it deserves brief mention here.

Perhaps the most important feature of Faish, for present purposes, arises in the opinion’s view of the congressional purpose. Faish quoted these words from a law review article: “Congress clearly intended that most educational debt still due within seven years of graduation should be nondischargeable.” [FN507] Of course, the word “clearly” would surprise other judges who have found it difficult to detect any such clarity in the legislative history. [FN508] It seems doubtful that numerous courts would apply a lenient interpretation of “undue hardship” if a draconian congressional intent were obvious. [FN509] The law review article just quoted does not itself offer any authority for the proposition.

On such a basis, Faish stated that Johnson, “applied correctly,” would result in the denial of most petitions, and that to that extent Johnson was in accord with the purpose of preventing abuse. [FN510] Granted, abuse by debtors will be diminished if they are shackled and chained, and here Faish clarified that the choice of a test is not nearly as important as the outcome, which is simply to deny discharge. [FN511] Thus, Faish does not appear to object to a perceived lack of attention, by Johnson, to the possibility that equity might require discharge. [FN512]

Also, providing another glance at the question of motive, Faish criticized Bryant’s attempt to replace the typical subjective item-by-item examination of a debtor’s financial affairs with an overall objective measure, [FN513] as well as Bryant’s disregard of the debtor’s reason for filing bankruptcy and, thus, of the governing congressional concerns. [FN514] In response, in Mayer v. PHEAA, [FN515] Judge Scholl of Bryant indicated his surprise at the latter criticism, noting *457 that Brunner itself appeared to reject Johnson’s inquiry into the debtor’s moX457ve. [FN516]

Finally, offering the obligatory swipe at the debtor’s intent to buy a car, Faish cited Matthews v. Pineo [FN517] for the proposition that the question was whether repayment would impose an unconscionable hardship. [FN518] The Third Circuit did not seem to recognize, in that instance, that the requirement of unconscionability springs from a different statute and applies to a different kind of loan. [FN519]

A Contrary Voice: Cheesman

In a decision reached after Roberson but before Faish, the Sixth Circuit in Cheesman v. TSAC [FN520] established the irrelevance of the Johnson vs. Bryant vs. Brunner debate on the outward form of the tests that a court might apply to a debtor. It accomplished this by using the Brunner tests and yet reaching conclusions very different from those of other courts following Brunner. (Although Cheesman indicated that it did not need to select Brunner or some other approach, stating that any test would lead to the same result, [FN521] its analysis did follow the three Brunner steps. [FN522])

Applying Brunner Step 1: Present Inability to Pay

Cheesman began its analysis with these words: “First, there was no indication that the Cheesmans were capable of paying the loans. . . .” [FN523] The opinion further said, “There is no assurance [that the debtors’ situation will improve]” and “There is no evidence that the Cheesmans did not act in good faith.” [FN524] In this regard, while not explicitly placing the burden of proof on the creditor, [FN525] Cheesman (like numerous other decisions) did require from the debtor a showing much less stringent than poverty. [FN526] The *458 Cheesman family that was experiencing hardship by any definition was, it turns out, a family of four that, by the court’s calculation, was spending about $20,500 per year, [FN527] as compared to a federal poverty guideline of $13,950. [FN528]

*459 The review of car ownership was also handled very differently: instead of attacking the debtors for their seeming folly in reaffirming a car loan of $7,081 on a vehicle worth $3,000, [FN529] that debt seems to have been one more factor suggesting that the debtors were experiencing difficulty. [FN530] Or, to examine a different item of arguably discretionary expense, Cheesman found no fault with the decision to spend extra to improve a child’s basic welfare. [FN531]

Applying Brunner Step 2: Inability to Pay Continuing for Significant Portion of Repayment Period

As Roberson shows, [FN532] the second stage of the Brunner analysis suggests two questions: how far into the future should the court peer, and when will the court finish its examination of the future?

On the first question, given the creditor’s indication of how much time remains in the repayment period, [FN533] some courts have tried to guess at what may occur during all of the years remaining in the period, and even beyond, while others have limited themselves to a much shorter time-frame. [FN534]

Cheesman demonstrated the sort of practicality that is possible only for a court not seeking to amplify every shred of hope. Focusing upon the real- world situation facing the debtors, the court did not take the opportunity to speculate that, if they recovered jobs like those which they had had *460 previously, they might be earning $30,000 per year [FN535]-even though Mr. Cheesman had testified that there was a possibility of obtaining a promotion in the near future. [FN536] This was in marked contrast to Roberson, whose outcome seems heavily dependent on the fact that the debtor had also earned $30,000 once upon a time [FN537]-not to mention a case of great interest to the present author, Woodcock v. Chemical Bank, [FN538] in which the Tenth Circuit affirmed lower court opinions that relied, in part, on the theory that the debtor could return to a career that he had abandoned seven years earlier, to which the lower courts admitted he showed no sign of returning. [FN539]

On the question of when the court will conclude its scrutiny of the future, Cheesman repeated Roberson’s error of postponing the day of final decision, in case the debtors’ condition improved. [FN540] This provoked the dissent that if the determination of dischargeability can be revisited at a later date in light of improved conditions, then a determination of nondischargeability should be equally subject to revision in light of worsened conditions. [FN541] One might suggest that both the majority and the dissent in Cheesman erred in this regard because, on one hand, the very purpose of the fresh start is to create a basis upon which circumstances can improve, [FN542] but, on the other hand, it would be an injustice to subject debtors to long-term extreme poverty if the bankruptcy court’s one-shot analysis proves overly optimistic. [FN543]

*461 3. Applying Brunner Step 3: Good Faith Effort to Repay

In Cheesman, the Sixth Circuit held that a total of $200, paid in four payments by two debtors, made less than eighteen months before bankruptcy, was not evidence of bad faith. [FN544] By contrast, in Woodcock, the court held that two to four payments on the loans by one debtor, made in the four years preceding bankruptcy, constituted bad faith. [FN545] Cheesman also suggests a much more tolerant approach to deferments than Brunner when the debtor appears unable to afford any payments. [FN546]

In this context, the hard-line circuits do not construe the good faith requirement entirely in accord with one another. In Brunner, good faith was strictly a matter of the debtor’s payment history on her student loans; her failure to seek a job outside her field of study was treated under steps 1 and 2, in connection with her present and future prospects. [FN547] The court in Woodcock, by contrast, critiqued the debtor’s career choice as a good-faith issue, [FN548] evidently following Johnson’s definition of that test. [FN549] Regardless of the test used, however, hard-line courts sometimes claim a godlike quantum of wisdom and authority with which to instruct debtors in such career decisions, [FN550] as well as in other fundamental aspects of their lives. [FN551]

*462 Again, Cheesman sounded a very different note, deeming it significant that “the Cheesmans chose to work in worthwhile, albeit low-paying, professions” and on that basis finding “no indication that they were attempting to abuse the student loan system by having their loans forgiven before embarking on lucrative careers.” [FN552] Cheesman contains no implication that one should not take out student loans unless one is certain that one’s field of study, and one’s abilities and values upon graduation, will guarantee good-paying employment throughout the years (or decades [FN553]) of the loan repayment period. [FN554]

Summary: What Cheesman Shows

Two courts of appeals-the Sixth Circuit in Cheesman and the Tenth Circuit in Woodcock-have stated that any test of undue hardship would have led to the same result. [FN555] Yet, as shown, while ostensibly applying the same tests, Cheesman was diametrically opposed to Woodcock, Brunner, and other circuit court decisions, in the handling of specific issues and in the final results reached. Certainly the alleged tests were not the guides that ultimately determined the outcome.

Rather, courts reviewing undue hardship have been steered by their differing allocations of burdens and standards of proof. Those allocations, in turn, have depended upon differing interpretations of the intent of *463 Congress. In the end, it appears that those interpretations may tell more about the interpreters than about the law.

CONCLUSION

Does the court construe the fresh start as a curative tool that can bring the debtor into a productive position within society or, rather, as a free ride at taxpayer expense? Is the purpose of Congress to preserve the student loan funds no matter what or, instead, to facilitate national growth, material and otherwise, by all reasonable means, including schooling (to the extent that it does increase productivity rather than merely wasting time and money)? Is institutional malfeasance necessarily peripheral to the student loan default crisis and to any resulting bankruptcies?

The majority of courts have taken a highly political and class-conscious position on such questions, defending institutions without regard to their unclean hands, frequently to the point of illogic. The student loan exception to discharge, as applied by many courts, indicates that the student debtor is comparable to the defrauder, the deadbeat dad, and the drunk driver-with virtually no accommodation for the statute’s mitigating factor of undue hardship. Students who might formerly have been treated as the promise of the future are now, implicitly, a threat to the nation. If, in such a climate, any student debtors have acquired an us-versus-them attitude lacking in civic responsibility, it seems certain that they face some similarly minded role models on the other side of the table. This is a shameful result for a program as well-intentioned and valuable as the student loan program.

The hard-line approach to student loan discharge prompts thoughts of Russian Roulette. In that “game,” one has a five-in-six chance of surviving. These are excellent odds. Yet the penalties for bad luck are so severe as to discourage all but the most unreasonably confident or fatally indifferent participants. By the same principle, under the present construction of’ 523(a)(8)(B), one might expect any sensible would-be college student to avoid student loans if s/he believes there is any realistic chance of career failure. Of course, as one may realize from one’s own college experience, those who think they may fail and those who actually do fail often fall into very different groups. It is poor policy to convey, to those future college students who are most eager to succeed and most worried about failing (and to their parents) this message: your student loans could haunt you forever, no matter how bad your situation may become, how much the job market may change, or how poor your education may be.

Given the controversy in the 1970s surrounding the introduction of a student loan exception to discharge, that exception should not have become law in an unexplained backroom deal, and for the same reason should not be periodically re-rigged on the fly, via amendments from a Congress that does not appear to have given it serious attention for nearly two decades. Moreover, regardless of the state of affairs in Congress, the judiciary could markedly improve its treatment of the statute’s words and goals. Since *464 Plato’s “political greatness and wisdom” have thus far failed to meet, for these purposes, in either such branch of government, the struggling debtor who hopes to obtain “a possibility of life and behold the light of day” [FN556] may well conclude that s/he must take a different path to justice, through some other machination or in some other jurisdiction. One reasonably hopes that this article will facilitate a better alternative under the law.

Footnotes

For some reason, in the version I retain, hyperlinks are missing from the first 120 footnotes. This may not be a big deal; it seems most of the later ones require a Westlaw subscription, which readers may not possess.

[FNa1]. Columbia University B.A. (1979), J.D. (1982), M.B.A. (1983). Member (inactive) of bars of New York and New Jersey. Author, Take the Bar and Beat Me (1991), Bureaucrat: Service with a Smile (1996). Pro se Plaintiff in well- known § 523(a)(8) case (see infra note 539-40 and accompanying text). See also <http://www.geocities.com/CapitolHill/Senate/3215> (author’s Website). The author wishes to thank the law librarians in Augusta, Erie, Providence, and Tacoma, and at the Universities of Colorado, Pittsburgh, and Southern Maine, for their assistance.

[FN1]. Regarding the types of student loans and other aid available, see generally 28 U.S.C. Chapter 28 (Federal Higher Education Resources and Student Assistance), Subchapter IV (Student Assistance); 34 C.F.R. Title 34 (Education), Chapter VI (Office of Postsecondary Education, Dep’t of Education); The College Board, College Costs & Financial Aid Handbook 1998 (18th ed. 1997); Pat Ordovensky, Financial Aid for College (Peterson’s 1995). Regarding the types of federal student loan programs specifically, see infra note 183.

[FN2]. References herein to sections of statute are to sections of United States Code, Title 11 (the “Bankruptcy Code”) unless otherwise indicated. Section 523(a)(8) reads as follows:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt-. . . (8) for an educational benefit overpayment or loan made, insured, or guaranteed bya governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless-(A) such loan, benefit, scholarship or stipend overpayment first became due more than 7 years (exclusive of any applicable suspension of the repayment period) before the date of the filing of the petition; or (B) excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor’s dependents;

. . . .

Sections 727 and 1328(b) provide for discharge of debts under Chapters 7 and 13, respectively, of the Bankruptcy Code.

[FN3]. A reader of the case law may note that some institutions have been especially active in student loan discharge litigation. For brevity, a few of those institutions are referred to herein by their acronyms, as follows: Higher Education Assistance Foundation (“HEAF”), Pennsylvania Higher Education Assistance Authority (“PHEAA”), New York State Higher Education Services Corporation (“NYSHESC”), The Education Resources Institute, Inc. (“TERI”), and Tennessee Student Assistance Corporation (“TSAC”).

[FN4]. The debts declared nondischargeable by § 523(a) include, inter alia, some forms of the following: taxes (subsection (1)), debts incurred through by falsehood or incurred shortly before bankruptcy (subsection (2)), debts not listed on the debtor’s bankruptcy schedules (subsection (3)), debts arising from frauds and embezzlements (subsection (4)), alimony and support (subsection (5)), debts for willful and malicious injury (subsection (6)), governmental fines and penalties (subsection (7)), student loans (subsection (8)), debts arising from accidents caused while driving while intoxicated (subsection (9)), debts from prior bankruptcy filings (subsection (10)), penalties for fraud as a fiduciary at a depository institution (subsection (11)) or for failure to fulfill commitments to such an institution (subsection (12)), orders of restitution under Title 18 (subsection (13)), debts incurred to pay taxes covered by subsection (1) (subsection (14)), other divorce-related debts (subsection (15)), condominium fees (subsection (16)), fees and expenses relating to 28 U.S.C. § 1915 (subsection (17)), and Social Security support debts owed to cities or states (subsection (18)).

[FN5]. The statute refers to a variety of educational loans, benefits, and other amounts. 11 U.S.C. § 523(a)(8) (1994). Except where indicated otherwise, this article refers collectively to all such loans, benefits, and other amounts by such shorthand terms as “student loans,” “educational loans,” or “educational debts.” Also, references herein to “schools,” “colleges,” and “universities,” and to educational “creditors” and “lenders,” are generally intended to include, broadly, any organizations that come within the scope of § 523(a)(8). See infra text accompanying note 71.

[FN6]. 11 U.S.C. § 523(a)(8)(A) & (B).

[FN7]. Although the focus here is upon subsection (B) of § 523(a)(8), the parallel relationship of (A) and (B) suggests that some observations herein may pertain to subsection (A) as well. This article points out some such instances of cross-application.

[FN8]. See, e.g., infra notes 356 (Code Review Project of National Bankruptcy Conference has recommended reinstatement of Chapter 13 discharge of student loans because, as a practical matter, discharge is generally unavailable to those who should receive it) & 404 (National Bankruptcy Review Commission has recommended repeal of § 523(a)(8)).

[FN9]. U.S. Const., art. I, § 8, cl. 4. See infra notes 550-51 (regarding constitutional questions).

[FN10]. Charles Jordan Tabb, The Historical Evolution of the Bankruptcy Discharge, 65 Am. Bankr. L.J. 325, 344-62 (1991); Jeffrey L. Zackerman, Comment, Discharging Student Loans in Bankruptcy: The Need for a Uniform “Undue Hardship” Test, 65 U. Cin. L. Rev. 691, 693-96 (1997).

[FN11]. Bankruptcy Act of 1898, ch. 541, 30 Stat. 544 (1898) (repealed 1978).

[FN12]. H.R. Rep. No. 55-65, at 43 (1897) (incorporating H.R. Rep. No. 54- 1228).

[FN13]. Tabb, supra note 10, at 364.

[FN14]. Pub. L. No. 95-598, 92 Stat. 2549 (1978) (codified as amended at 11 U.S.C. § § 101–1330).

[FN15]. Although this article concentrates upon discharge of student loans under Chapter 7, discharge under Chapter 13 must also address many of the same issues. See infra note 44 and accompanying text (regarding Chapter 13).

[FN16]. H.R. Rep. No. 95-595, at 125 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 6086 [hereinafter cited as House Report 95-595].

[FN17]. Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S. Ct. 695, 699 (1934) [emphasis supplied], quoted in Grogan v. Garner, 498 U.S. 279, 286- 87, 111 S. Ct. 654, 659 (1991).

[FN18]. Murphy & Robinson Investment Co. v. Cross (In re Cross), 666 F.2d 873, 879 (5th Cir. 1982).

[FN19]. Perez v. Campbell, 402 U.S. 637, 652, 91 S. Ct. 1704, 1712 (1971) (state law hindering the full effectiveness of the new opportunity in life that is the purpose of the federal bankruptcy discharge is unconstitutional under the Supremacy Clause of the Constitution). See infra note 228 (regarding preemption).

[FN20]. See infra note 343 (fresh start includes debtor’s opportunity to have post-bankruptcy liesure).

[FN21]. Gleason v. Thaw, 236 U.S. 558, 562, 35 S. Ct. 287, 289 (1915).

[FN22]. In re Pelkowski, 990 F.2d 737, 744-45 (3d Cir. 1993); Financial Collection Agencies v. Norman (In re Norman), 25 B.R. 545, 547 (Bankr. S.D. Cal. 1982); Butler v. Butler (In re Butler), 186 B.R. 371, 374 (Bankr. D. Vt. 1995); Morrissey v. Wiencek (In re Wiencek), 58 B.R. 485, 488 (Bankr. E.D. Va. 1986).

[FN23]. 11 U.S.C. § 707(b) (1994).

[FN24]. St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 680 (11th Cir. 1993).

[FN25]. Commerce Bank & Trust Co. v. Burgess (In re Burgess), 955 F.2d 134, 137 (1st Cir. 1992).

[FN26]. See generally Thomas H. Jackson, The Fresh-Start Policy in Bankruptcy Law, 98 Harv. L. Rev. 1393 (1985) (a non-waivable right of discharge provides protection against destructive regret resulting from flawed decision- making with respect to credit, and eliminates incentives that cause debtors to become less productive when large portion of wages go to creditors); Charles G. Hallinan, The “Fresh-Start” Policy in Consumer Bankruptcy: A Historical Inventory and an Interpretive Theory, 21 U. Rich. L. Rev. 49, 73 (1986) (financial difficulty yields signficant adverse psychological and health consequences); Robert F. Salvin, Student Loans, Bankruptcy, and the Fresh Start Policy: Must Debtors Be Impoverished to Discharge Educational Loans?, 71 Tulane L. Rev. 139, 174-79 (1996) (if bankrupt debtors view themselves as having little dignity and nothing left to work for but the repayment of creditors, they tend to have less incentive to reestablish themselves as productive members of society and to become less responsive to governmental and neighborhood efforts at social control; conditions of poverty promote deviant behavior; and the condition of owing beyond one’s ability to repay should be treated as a natural result of the failure that inevitably occurs to some participants in a competitive economy).

[FN27]. Executive Director, Commission on the Bankruptcy Laws of the United States, Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. No. 93-137, Pt. II, § 4-506(a)(8), at 136 (1973), reprinted in 2A Collier on Bankruptcy pts. I & II (15th ed. 1994) [hereinafter cited as Bankruptcy Commission Report]. This Bankruptcy Commission is distinct from the National Bankruptcy Review Commission of the 1990s. See infra note 403.

[FN28]. Bankruptcy Commission Report, supra note 28, pt. II, at 140 n.14.

[FN29]. See infra note 165.

[FN30]. Section 439A was codified at 20 U.S.C. § 1087-3 (1976) (repealed 1978), and provided as follows:

(a) A debt which is a loan insured or guaranteed under the authority of this part may be released by a discharge in bankruptcy under the Bankruptcy Act only if such discharge is granted after the five-year period. . . beginning on the date of commencement of the repayment period of such loan, except that prior to the expiration of the five-year period, such loan may be released only if the court in which the proceeding is pending determines that payment from future income or other wealth will impose an undue hardship on the debtor or his dependents.

[FN31]. Education Amendments of 1976, Pub. L. No. 94-482, 90 Stat. 2081 (codified at 20 U.S.C. § § 1001-06 (1976). See House Report 95-595, supra note 16, at 2 (1977); Alan M. Ahart, Discharging Student Loans in Bankruptcy, 52 Am. Bankr. L.J. 201, 202-204 (1978).

[FN32]. Repealed by Pub. L. No. 95-598, Title III, § 317, Nov. 6, 1978, 92 Stat. 2678. See infra note 46 and accompanying text (§ 439A was rushed).

[FN33]. See, e.g., House Report 95-595, supra note 16, at 132 (1977) (in 1977, the Subcommittee on Civil and Constitutional Rights unanimously rejected a student loan exception to discharge, and, by a vote of 4-23, so did the full Judiciary Committee). See infra note 488. See generally NYSHESC v. Kohn (In re Kohn), 5 Bankr. Ct. Dec. (CRR) 419, 421-424 (Bankr. S.D.N.Y. 1979); Jerome M. Organ, “Good Faith” and the Discharge of Educational Loans in Chapter 13: Forging a Judicial Consensus, 38 Vand. L. Rev. 1087, 1095-99 (1985).

[FN34]. Objections included: a study by the General Accounting Office indicating that less than 1% of all matured student loans were being discharged in bankruptcy; evident media exaggeration of the problem; the fact that the overwhelming majority of student bankruptcies were legitimate, and that even in the eyes of Congress, the problem was due to only a small number of abusers; the violence that such a provision would do to the fresh start and to the fundamental bankruptcy principle requiring equality of treatment for all debts and creditors; and the impropriety of treating all student borrowers as suspected felons. See Ahart, supra note 31, at 204 n.10; Mala Gusman Bridwell, Student Loan Bankruptcies, 1978 Wash. U.L.Q. 593, 616-17 (1978); Janice E. Kosel, Running the Gauntlet of “Undue Hardship”-The Discharge of Student Loans in Bankruptcy, 11 Golden Gate U.L. Rev. 457, 462-64 (1981); Organ, supra note 33, at 1097 n.59; Salvin, supra note 26, at 180; Scott J. Van Hove, Student Loan Bankruptcy: Establishing “Undue Hardship” in South Dakota, 27 S.D.L. Rev. 282, 286 nn.31-32 (1982); see also Kurt Wiese, Discharging Student Loans in Bankruptcy: The Bankruptcy Court Tests of “Undue Hardship,” 26 Ariz. L. Rev. 445, 446 (1984) (citing lenders’ mismanagement of student loan portfolios leading to high default rate); infra note 44 (Chapter 13 statistics reveal no pattern of abuse by borrowers); infra notes 202-247 and accompanying text (institutions are responsible for significant problems in student loan programs).

[FN35]. Statement by Don Edwards, 124 Cong. Rec. H11089 (1978), reprinted in 1978 U.S.C.C.A.N. 6436, 6454.

[FN36]. See, e.g., In re Pelkowski, 990 F.2d 737, 743 (3d Cir. 1993).

[FN37]. See 11 U.S.C. § 523(a)(8) (1994) (Historical and Statutory Notes). See also Santa Fe Medical Services, Inc. v. Segal (In re Segal), 57 F.3d 342, 346-47 (3d Cir. 1995) and T I Federal Credit Union v. DelBonis, 72 F.3d 921, 936-37 (1st Cir. 1993) (reviewing history of amendments).

[FN38]. See Alibatya v. New York Univ. (In re Alibatya), 178 B.R. 335, 340 (Bankr. E.D.N.Y. 1995) (finding that 1990 amendments did not alter the essential purpose of § 523(a)(8)).

[FN39]. Crime Control Act of 1990, Pub. L. No. 101-647, § 3621, 104 Stat. 4789, 4964-65 (1990).

[FN40]. Id.

[FN41]. H.R. Rep. No. 101-736, at 33-34 (1990), reprinted in 1990 U.S.C.A.N. 6472, 6641-42 (commenting upon the inclusion of educational benefit overpayments, but not on the change of the five-year provision); Arthur Ryman, Contract Obligation: A Discussion of Morality, Bankruptcy, and Student Debt, 42 Drake L. Rev. 205, 222 (1993) (noting change was not reviewed by the normal congressional committees).

[FN42]. Pub. L. No. 101-647, § 3621, 104 Stat. 4789 (1990).

[FN43]. Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, 104 Stat. 1388, 1388-28 (1990) (codified at 11 U.S.C. § 1328(a)(1994)).

[FN44]. Compare Kosel, supra note 34, at 481 (finding there existed a “remarkably anomalous” treatment of student loans, between the restrictions on discharge under Chapter 7 and the free dischargeability of such loans under Chapter 13, before the 1990 amendment of the latter) with National Bankr. Review Comm’n, Bankruptcy: The Next Twenty Years: Final Report § 1.4.5 (1997) [[hereinafter cited as NBRC Report] (no empirical evidence has been discovered showing that students systematically abused that easy discharge under Chapter 13). See infra note 403.

[FN45]. The period may have been changed to seven years because of concern that a five-year plan under Chapter 13 would provoke confusion with the five- year period of § 523(a)(8)(A) or would use up all of those five years. See infra note 188 (regarding effect of non-deferment suspensions of repayment under § 523(a)(8)(A)). Lacking definitive history, these speculations cannot provide much clarification.

[FN46]. National Bankr. Conference, Code Review Project, Reforming the Bankruptcy Code: Final Report 158 (1994) [hereinafter cited as Code Review Project]; cf. Organ, supra note 34, at 1097 (prior § 439A was enacted in a rush and was never referred to the House Judiciary Committee).

[FN47]. See infra notes 145 (legislative silence on burden of proof), 297- 301 and accompanying text (evidence of congressional inattention).

[FN48]. See infra notes 389-97 and accompanying text.

[FN49]. See infra note 526 and accompanying text.

[FN50]. See In re Pelkowski, 990 F.2d 737, 742 (3d Cir. 1993) (principal indication of legislative intent regarding § 523(a)(8) can be discerned from statements made by the House supporters of the provision); but see, e.g., T I Federal Credit Union v. DelBonis, 72 F.3d 921, 936 (1st Cir. 1995) (statement by Rep. Ertel not conclusive of Congress’ intent); supra note 33 & infra note 488 (view of House as a whole was very different from that of the provision’s few supporters); infra notes 369-73 and 446-47 and accompanying text (noting judicial bafflement at the intent of Congress).

[FN51]. In light of evident congressional inattention, it appears possible that, although § 523(a)(8) remains on the books, the subsequent amendment of 11 U.S.C. § 707 has rendered this abuse-preventive purpose superfluous. Section 707(b), added in 1984, provides that a court “may dismiss a case filed by an individual debtor. . . if it finds that the granting of relief would be a substantial abuse of the provisions of this chapter.” Pub.L. 98-353, § 312(2), July 10, 1984, 98 Stat. 355, 381 (1984).

[FN52]. It seems that “deserving,” like “honest,” is a moral judgment relevant only to the extent that it describes a debtor whose motives match the productivity-oriented assumption on which the fresh start is premised. See supra note 26 and accompanying text. The moral tone appears to reduce the incentive, at least in bankruptcy law, to determine whether the dishonest debtor may also be somehow converted to a productive end. Compare Comment, Paula Martin, Student Loans: Curing Problems and Insuring the Future, 9 Capital UNiv. L. Rev. 579, 589 (1980) (decision in Florida Board of Bar Examiners re G.W.L., 364 So. 2d 454 (Fla. 1978), refusing bar admission to petitioner who had discharged student loans in bankruptcy, boldly linked such discharge to moral turpitude) with Richard E. Flint, Bankruptcy Policy: Toward a Moral Justification for Financial Rehabilitation of the Consumer Debtor, 48 Wash. & Lee L. Rev. 515, 540 (1991) (significant ethical reasons exist to grant discharge of student loans). Regarding other relevant moral issues, see, e.g., infra notes 203 (Senate report describing lender exploitation of student borrowers), 238-40 (schools providing worthless educations), 275 & 356-61 (courts absolving institutions of responsibility and placing heavy litigation burdens upon pro se debtors who are obviously unable to bear them), & 499 (class-based judicial moralizing) and accompanying text.

[FN53]. Pelkowski, 990 F.2d at 743; Andrews Univ. v. Merchant (In re Merchant), 958 F.2d 738, 742 (6th Cir. 1992). Pelkowski holds that parental co- signers are also abusive, undeserving student debtors. See Pelkowski, 900 F.2d at 744. See generally George H. Singer, Section 523 of the Bankruptcy Code: The Fundamentals of Nondischargeability in Consumer Bankruptcy, 71 Am. Bankr. L.J. 325, 398-400 (regarding non-student co-signers).

[FN54]. Grogan v. Garner, 498 U.S. 279, 287, 111 S. Ct. 654, 659 (1991).

[FN55]. See supra notes 17-27 and accompanying text.

[FN56]. 73 Am. Jur. 2d Statutes § 254 (1974).

[FN57]. Claxton v. Student Loan Marketing Ass’n (In re Claxton), 140 B.R. 565, 570 (Bankr. N.D. Okla. 1992).

[FN58]. See, e.g., Ford v. NYSHESC (In re Ford), 22 B.R. 442, 445 (Bankr. W.D.N.Y. 1982) (holding that duty of court is to strike a balance between congressional concern over cases of extreme student loan abuse and bankruptcy principles of fresh start and equity).

[FN59]. See supra text accompanying note 17.

[FN60]. Section 523(c)(1) provides as follows:

Except as provided in subsection (a)(3)(B) of this section, the debtor shall be dis-charged from a debt of a kind specified in paragraph (2), (4), (6), or (15) of subsection (a) of this section, unless, on request of the creditor to whom such debt is owed, and after notice and a hearing, the court determines such debt to be excepted from dis-charge under paragraph (2), (4), (6), or (15), as the case may be, of subsection (a) of this section.

Section 523(c)(2) provides for certain exceptions to § 523(c)(1) involving federal depository institutions regulatory agencies.

[FN61]. See id. (citing § 523(a)(3)(B)).

[FN62]. S. REP. No. 95-989 at 79 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5865 [hereinafter Senate Report 95-989]. This comment accompanied the Senate’s draft student loan exception in S. 95-2266, at § 523(a)(8) (1978), reprinted in 3 Collier on Bankruptcy pt. VII, at 417 (15th ed. 1994). That draft did not become law, however. It provided for nondischarge of the debt:

(8) to the extent that it is educational debt if the first payment of any installment thereof is not yet due or was due on a date less than five years prior to the date of the filing of the petition, unless if the court finds that payment of the debt from future income or other wealth will impose an undue hardship on the debtor and his dependents.

[FN63]. Fed. R. Bankr. P. 4007(a). See, e.g., North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 236 n.1 (Bankr. D. Minn. 1986) (plaintiff filed complaint but need not have done so, since statute is self-executing); supra note 37 (other cases in which creditors filed complaints).

[FN64]. Buford v. HEAF, 85 B.R. 579, 581 (D. Kan. 1988) (evidently relying upon the principle of expressio unius est exclusio alterius and upon a citation to House Report 95-595, supra note 16, at 132 (1977), in which the Buford court found evidence that the House had specifically indicated that subsection (8) should be included in § 523(c)(1) but had then acquiesced in its deletion therefrom).

[FN65]. When Senator DeConcini stated that the student loan exception “follows generally current law,” Senate Report 95-989, supra note 62, at 79, he was presumably referring in general to the continuation of a student loan exception to discharge from the old § 439A. See In re Pelkowski, 990 F.2d 737, 740 n.5 (3d Cir. 1993) (§ 523(a)(8) is similar to former § 439A). See also infra text accompanying note 137 (practice under § 439A).

[FN66]. See supra text accompanying note 30.

[FN67]. Bankruptcy Commission Report, supra note 27, § 4-506(b), at 137 provided as follows: (b) Determination of Dischargeability. . . . A debt shall not be denied dischargeability under any clause of subdivision (a) other than (1), (4), or (6) unless a complaint to obtain a determination of dischargeability is filed within the time prescribed by the Rules of Bankruptcy Procedure.

[FN68]. North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 236 n.1 (Bankr. D. Minn. 1986).

[FN69]. Indiana Univ. v. Canganelli, 501 N.E.2d 299, 301 (Ill. App. Ct. 1986). See Massachusetts Higher Educ. Assistance Corp. v. Taylor, 459 N.E.2d 807, 811-12 (1984) (the creditor is not required to file a complaint to determine dischargeability of student loans, and loans are nondischargeable in the absence of action by creditor or debtor).

[FN70]. Buford v. HEAF, 85 B.R. 579, 582 (D. Kan. 1988).

[FN71]. See infra notes 179-247 and accompanying text.

[FN72]. See, e.g., Santa Fe Medical Services, Inc. v. Segal (In re Segal), 57 F.3d 342, 345 n.5 (3d Cir. 1995) (discharging debt to employer incurred to repay an educational debt, in response to complaint brought by creditor; debtors did not assert the applicability of either § 523(a)(8)(A) or § 523(a)(8)(B)). See supra notes 18-25 and accompanying text (statute is construed against creditor).

[FN73]. See infra text accompanying note 450 (avoidance under Brunner).

[FN74]. See infra notes 355-61 and accompanying text (limits on pro se debtors’ ability to prosecute cases).

[FN75]. See 28 U.S.C. § 1930(a)(1) ($130 bankruptcy filing fee for cases commenced under chapters 7 or 13); 28 U.S.C. § 1930(b) (authorizing Judicial Conference of the United States to prescribe additional fees in cases under title 11, of the same kind as the Conference prescribes under 28 U.S.C. § 1914(b)); 28 U.S.C. § 1914(b) (authorizing additional fees as prescribed by the Judicial Conference); 28 U.S.C.A. § 1930 Historical & Statutory Notes: Judicial Conference Schedule of Fees, point (6) (requiring collection of fee for filing a complaint in bankruptcy court, in the same amount as the fee prescribed in 28 U.S.C. § 1914(a)); 28 U.S.C. § 1914(a) (filing fee of $150); 11 U.S.C. § 707(a)(2) (failure to pay fees may result in dismissal of the case); 28 U.S.C. § 1915(a)(1) (impoverished debtor may proceed without paying fee by filing in forma pauperis); 28 U.S.C. § 1915(e)(2) & (f)(1) (if in forma pauperis claim of poverty is untrue, case may be dismissed and debtor may be assessed costs). See also Hallinan, supra note 26, at 74 (a concern influencing the development of the Bankruptcy Code was the evidence that a substantial number of debtors who would benefit from bankruptcy failed to file).

[FN76]. See, e.g., infra notes 374 (extreme standard used to determine undue hardship) & 455 (complying with judicialrequirements may only raise the bar as to what is expected of debtors) and accompanying text.

[FN77]. See infra notes 192 & 361.

[FN78]. Fed. R. Bankr. P. 4007(b); 9B Am. Jur. 2d Bankruptcy § 3183 (1991); Adam Glass Service, Inc. v. Federated Dep’t Stores, Inc., 173 B.R. 840, 843 (E.D.N.Y. 1994).

[FN79]. See infra notes 245 & 335.

[FN80]. See supra note 26 and accompanying text.

[FN81]. Lawrence Kalevitch, Educational Loans in Bankruptcy, 2 N. Ill. L. Rev. 325, 338-39 (1982). See In re Winebrenner, 170 B.R. 878, 883 (Bankr. E.D. Va. 1994) (quoting Costello v. United States, 365 U.S. 265, 282, 81 S. Ct. 534, 543, 5 L. Ed. 2d 551 (1961)) (laches requires proof of lack of diligence by the party against whom the defense is asserted and prejudice to the party asserting the defense); In re Bianucci, 4 F.3d 526, 528-29 (7th Cir. 1993) (five-month period of inaction by debtors, knowing that creditor’s judgment lien had never been affirmatively avoided, combined with creditor’s expenses to revive its judgment, were grounds for finding prejudice); United States v. Rhodes, 788 F.Supp. 339 (E.D. Mich. 1992) (attempted collection after 17-year delay barred by laches).

[FN82]. Sanders v. Brady (In re Brady, Texas, Municipal Gas Corp.), 936 F.2d 212, 218 (5th Cir. 1991).

[FN83]. With certain exceptions, see § 362(b), most of which do not apply to the ordinary student loan discharge case, but see § 362(16), creditors are broadly prevented (“stayed”) from pursuing collection efforts against debtors, see § 362(a), from the date when the bankruptcy petition is filed, id. (citing § § 301-303), until the case opened by that filing is closed or dismissed, discharge is granted or denied, or, if applicable, the property that the creditor seeks is no longer part of the debtor’s estate. § 362(c); but see § 362(d) (creditor may seek earlier court order terminating or modifying this stay). See, e.g., Haile v. NYSHESC, 90 B.R. 51, 55 (W.D.N.Y. 1988) (finding guarantor in contempt for wilfully violating automatic stay).

[FN84]. See § 350(a) (bankruptcy court closes case after estate is fully administered and trustee has been discharged).

[FN85]. See supra text accompanying note 62.

[FN86]. See infra note 492 and accompanying text. There are no guarantees that the bankruptcy court will allow the debtor to reopen the case. See Indiana Univ. v. Canganelli, 501 N.E.2d 299, 300 (Ill. App. Ct. 1986) (although state court ordered debtor to return to the federal bankruptcy court and file his complaint to determine dischargeability there, that court decided that the state court could decide the issue with greater judicial economy); Sanders v. Brady (In re Brady, Texas, Municipal Gas Corp.), 936 F.2d 212, 218 n.1 (construing 28 U.S.C. § 1334) (bankruptcy court must defer to state court in some situations).

[FN87]. Cf. Craig v. Loan Servicing Center (In re Craig), 56 B.R. 479, 481 (Bankr. W.D. Mo. 1985) (the usual practice is to allow the debtor to plead his discharge where he is sued). But see Smith v. NYSHESC (In re Smith), 103 B.R. 392, 396 (Bankr. N.D.N.Y. 1988) (debtor’s affidavits as to hardship and accompanying letter requesting guarantor to consent to dischargeability (which guarantor declined to do) did not estop guarantor from seeking to collect on the note; but equity might have required discharge without filing complaint to determine dischargeability if debtor had triggered an evidentiary hearing by filing a motion).

[FN88]. Cf. supra note 72 (debtor did not have to rely on § 523(a)(8) when creditor filed complaint).

[FN89]. See supra text accompanying note 71.

[FN90]. See infra note 121 and accompanying text.

[FN91]. 2 McCormick, Evidence § 337 (J. Strong 4th ed. 1992).

[FN92]. See infra note 192.

[FN93]. See supra note 85 and accompanying text.

[FN94]. See infra note 192.

[FN95]. See supra note 75 and accompanying text.

[FN96]. See infra notes 355-61 and accompanying text.

[FN97]. See supra note 67 and accompanying text.

[FN98]. It would also be consistent with other disclosure requirements, see, e.g., 34 C.F.R. § 682.205 (1996), to require the creditor to supply an information sheet stating the basis upon which it has based its conclusion that the debt is nondischargeable, opening the possibility that debtors might be able to correct erroneous information in the creditor’s files.

[FN99]. Director, Ofc. of Workers’ Comp. Programs v. Greenwich Collieries, 512 U.S. 267, 273, 114 S. Ct. 2251, 2255(1994).

[FN100]. Grogan v. Garner, 498 U.S. 279, 286, 111 S. Ct. 654, 659 (1991); Addington v. Texas, 441 U.S. 418, 423-24, 99 S. Ct. 1804, 1808 (1979).

[FN101]. In re Winship, 397 U.S. 358, 371-72, 90 S. Ct. 1068, 1076 (1970) (Harlan, J., concurring); see Greenwich Collieries, 512 U.S. at 272, 114 S. Ct. at 2255 (1994) (where the standard of proof is the preponderance of the evidence, the party bearing the burden of persuasion must lose if the evidence is evenly balanced).

[FN102]. See Greenwich Collieries, 512 U.S. at 278, 114 S. Ct. at 2258 (a standard of proof can apply only to a burden of persuasion).

[FN103]. 29 Am. Jur. 2d, Evidence § 155 (1994) (burden of persuasion has two components: the facts that a party must plead and prove, and the amount of persuasion required to prove those facts).

[FN104]. See 2 McCormick, Evidence § 336 (J. Strong 4th ed. 1992) (burden of persuasion is crucial only if parties have sustained their burdens of producing evidence and only when all of the evidence has been introduced; its principal significance is limited to those cases in which the trier of fact is in doubt). Accord Bruner v. Office of Personnel Management, 996 F.2d 290, 293 (Fed. Cir. 1993).

[FN105]. See, e.g., 9 Wigmore, Evidence § 2489 (Chadbourn rev. 1981) (the risk of nonpersuasion of the jury never shifts); 5 Collier on Bankruptcy § 548.10, at 548-80 (15th ed. 1997) (same); St. Mary’s Honor Center v. Hicks, 509 U.S. 502, 505-506, 113 S. Ct. 2742, 2746-47 (1993) (in a workplace discrimination case brought under 42 U.S.C. § 2000e-2(a), the ultimate burden of persuasion remains at all times on the plaintiff); Fed. R. Evid. 301 (a presumption shifts the burden of production, but not the burden of persuasion). Some authorities have found several occasions when such a shift might occur. See, e.g., Simpson v. Home Petroleum Corp., 770 F.2d 499, 503 n.6 (5th Cir. 1985) (citing Roy R. Ray, Texas Law of Evidence § 48 (3d ed. 1980)) (noting “a few discrete exceptions to the rule”). The Supreme Court has said, however, that (at least as the law was construed in Massachusetts in 1833) only an affirmative defense could cause such a shift; moreover, the Court said that an affirmative defense might (not would) do so. Greenwich Collieries, 512 U.S. at 273, 114 S. Ct. at 2255. Since, strictly speaking, an affirmative defense raises a separate issue, entirely distinct from the issue for which the burden is being allocated, see infra note 158, it would seem to have its own burden of persuasion separate from the burden of persuasion on the original issue.

[FN106]. See e.g., St. Mary’s Honor Center, 509 U.S. at 505-506, 113 S. Ct. at 2746-47 (in a workplace discrimination case brought under 42 U.S.C. § 2000e-2(a), the burden of persuasion is on the plaintiff).

[FN107]. 2 McCormick, Evidence § 337 (J. Strong 4th ed. 1992) (a prediction of the allocation of the burden of persuasion based upon the pleadings may have to be revised when evidence is introduced at trial).

[FN108]. Id. at 427; 29 Am. Jur. 2d Evidence § 158 (1994); Bruner v. Office of Personnel Management, 996 F.2d 290, 293 (Fed. Cir. 1993).

[FN109]. Id.; Greenwich Collieries, 512 U.S. at 273, 114 S. Ct. at 2255. The burden of producing evidence is not always described clearly as first belonging to the party that must prove a prima facie case. See, e.g., St. Mary’s Honor Center, 509 U.S. at 506-07, 113 S. Ct. at 2747, possibly because the burden was also described, in the past, as “the necessity of producing evidence to meet that already produced.” Hill v. Smith, 260 U.S. 592, 594, 43 S. Ct. 219, 220 (1923).

[FN110]. 9 Wigmore, Evidence § 2487 (Chadbourn rev. 1981). See infra note 360 (regarding jury as trier of fact in bankruptcy cases).

[FN111]. See Black’s Law Dictionary 1189 (6th ed. 1990) (defining prima facie case as, inter alia, “such as will prevail until contradicted and overcome by other evidence”). Compare St. Mary’s Honor Center, 509 U.S. at 527, 113 S. Ct. at 2758 (Souter, J., dissenting) (in a workplace discrimination case brought under 42 U.S.C. § 2000e-2(a), a prima facie case is one that the plaintiff has actually established to the factfinder’s satisfaction) with id., 509 U.S. at 515, 113 S. Ct. at 2751 (Scalia, J.) (such prima facie case is nevertheless infinitely less than what would be required for a directed verdict). See 2 McCormick, Evidence § 338 (J. Strong 4th ed. 1992) (burden requires party to provide enough evidence to allow a reasonable person to infer the fact which this party will then attempt to prove at trial).

[FN112]. See Greenwich Collieries, 512 U.S. at 280, 114 S. Ct. at 2259 (1994) (construing Administrative Procedure Act § 7(c), 5 U.S.C. § 556(d) (quoting H.R. Rep No. 79-1980, at 36 (1946))) (when party with burden of persuasion establishes prima facie case supported by “credible and credited evidence,” it must either be rebutted or accepted as true); St. Mary’s Honor Center, 509 U.S. at 506-507, 113 S. Ct. at 2747 (in a workplace discrimination case brought under 42 U.S.C. § 2000e-2(a), the prima facie case places a burden on the other party to produce an explanation to rebut the prima facie case).

[FN113]. 509 U.S. at 509, 113 S. Ct. at 2748 (the question is whether the evidence, “taken as true, would permit the conclusion” that the rebuttal was correct [emphasis supplied]).

[FN114]. See id. (once the defendant’s production has been made, the trier of fact proceeds to decide the ultimate issue in the case).

[FN115]. See id., 509 U.S. at 530-31, 113 S. Ct. at 2759-60 (Souter, J., dissenting) (in a workplace discrimination case brought under 42 U.S.C. § 2000e-2(a), the burden of production shifts, from the rebutting party that successfully carries that burden, back to the party making the prima facie case; such burden now requires the latter party to provide evidence at a new level of specificity under the original issue, and merges with the ultimate burden of persuasion).

[FN116]. See Greenwich Collieries, 512 U.S. at 277-78, 114 S. Ct. at 2258 (a standard of proof can apply only to a burden of persuasion, and not to a burden of production); St. Mary’s Honor Center, 509 U.S. at 509, 113 S. Ct. at 2748 (the burden-of-production determination necessarily precedes the credibility-assessment stage).

[FN117]. See supra text accompanying note 101.

[FN118]. Grogan v. Garner, 498 U.S. 279, 287, 111 S. Ct. 654, 659-60 (1991).

[FN119]. Grogan, 498 U.S. at 287, 111 S. Ct. at 659.

[FN120]. See supra text accompanying note 71.

[FN121]. See, e.g., Financial Collection Agencies v. Norman (In re Norman), 25 B.R. 545, 548 (Bankr. S.D. Cal. 1982) (creditor must establish existence of debt owed to or insured or guaranteed by governmental agency or nonprofit institution of higher education); Coleman v. HEAF (In re Coleman), 98 B.R. 443, 447 (Bankr. S.D. Ind. 1989) (same); Santa Fe Medical Services, Inc. v. Segal (In re Segal), 57 F.3d 342, 347 (3d Cir. 1995) (holding that creditor must first establish that loan was for educational purpose). See generally Singer, supra note 53, at 388-89 nn.346-50 (other citations). Decisions under § 523(a)(8)(A) are parallel. See, e.g., Chisari v. Florida Dep’t of Educ. (In re Chisari), 183 B.R. 963, 966 (Bankr. M.D. Fla. 1995) (creditor has burden of proving that debt exists and was incurred for educational purposes).

[FN122]. See, e.g., Norman, 25 B.R. at 548; Coleman, 98 B.R. at 447. Cf. infra note 148 (regarding the burden on this point under § 523(a)(8)(A)). Allocation of the burden to the creditor is consistent with general principles. Compare Norman, 25 B.R. at 548 (quoting Williams v. Adminstrator of the Nat’l Aero. & Space Admin., 463 F.2d 1391, 1400 (C.C.P.A. 1972)) (holding that burden of proof generally lies on the party seeking to change the present state of affairs) with supra text accompanying note 23 (in bankruptcy, status quo favors debtor; creditor seeks change). See Norman, 25 B.R. at 548 (old Bankruptcy Act allocated the burden to the party objecting to discharge); supra note 67 and accompanying text (Bankruptcy Commission draft made discharge automatic unless creditor objected); supra note 65 (§ 523(a)(8) was intended to follow prior law); Fed. R. Bankr. P. 4005 (at the trial on a complaint objecting to a discharge, the plaintiff [[ordinarily, the creditor] has the burden of proving the objection); infra note 153 (other relevant principles). Compare 2 McCormick, Evidence § 337 (J. Strong 4th ed. 1992) (the risk of failure of proof may be placed upon the party who contends that the more unusual event has occurred) with supra notes 25 & 44 (bankruptcy abusers were only a small fraction of all student loan debtors in bankruptcy). Cf. Darrell Dunham & Ronald A. Buch, Educational Debts under the Bankruptcy Code, 22 Mem. St. U.L. Rev. 679, 707 (1992) (suggesting that courts may place specific burdens on the creditor as part of the undue hardship analysis).

[FN123]. See, e.g., Segal, 57 F.3d at 347 (creditor sought to persuade court that loan was “nondischargeable under section 523(a)(8)“); Coleman v. HEAF (In re Coleman), 98 B.R. 443, 447 (Bankr. S.D. Ind. 1989) (creditor must initially prove its entitlement to a finding of nondischargeability).

[FN124]. See Andrews v. South Dakota Student Assistance Corp. (In re Andrews), 661 F.2d 702, 704 (8th Cir. 1981) (debtor must show that repayment of loan would impose undue hardship); Brunner v. NYSHESC, 831 F.2d 395, 396 (2d Cir. 1987) (debtor must establish her eligibility for discharge based on undue hardship); PHEAA v. Faish (In re Faish), 72 F.3d 298, 301 (3d Cir. 1995), cert. denied, 116 S. Ct. 2532 (1996) (debtor has burden of demonstrating undue hardship); Woodcock v. Chemical Bank (In re Woodcock), 45 F.3d 363, 367 (10th Cir. 1995) (same); In re Roberson, 999 F.2d 1132, 1137 (7th Cir. 1993) (debtor must establish that his circumstances warrant discharge).

[FN125]. See, e.g., Alliger v. PHEAA (In re Alliger), 78 B.R. 96, 99; N.D. State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 236 n.1 (Bankr. D. Minn. 1986); O’Brien v. Household Bank FSB (In re O’Brien), 165 B.R. 456, 458 (Bankr. W.D. Mo. 1994).

[FN126]. See supra note 116 and accompanying text.

[FN127]. See, e.g., Alliger, 78 B.R. at 99; O’Brien, 165 B.R. at 459.

[FN128]. See, e.g., Faish, 72 F.3d at 301; Brunner, 831 F.2d at 396. This is worded in various ways. See, e.g., Roberson, 999 F.2d at 1137 (“the burden. . . to establish that his circumstances warrant discharge”); Alliger, 78 B.R. at 99 (“the burden of proof in making a case for dischargeability on the basis of undue hardship”).

[FN129]. See, e.g., Frech, 62 B.R. at 236 n.1 (burden of production and persuasion on the issue of dischargeability); Otto v. Niles (In re Niles), 106 F.3d 1456, 1460 n.3 (9th Cir. 1997) (burden of proving nondischargeability).

[FN130]. See Grogan, 498 U.S. at 287, 111 S. Ct. at 659-60 (basing a uniform standard of proof in § 523(a) cases on the assumption that dischargeability is the issue in such cases); supra text accompanying note 102.

[FN131]. E.g., Niles, 106 F.3d at 1460 n.3; Berthiaume v. PHEAA (In re Berthiaume), 138 B.R. 516, 520 (Bankr. W.D. Ky. 1992).

[FN132]. See, e.g., Grogan, 498 U.S. at 287, 111 S. Ct. at 659, 112 L. Ed. 2d at 765 (creditor must establish nondischargeability by the preponderance of the evidence); Niles, 106 F.3d at 1460 n.3 (noting that generalized statements that the creditor bears the burden of proving nondischargeability are common under § 523).

[FN133]. See, e.g., Chisari, 183 B.R. at 966.

[FN134]. Financial Collection Agencies v. Norman (In re Norman), 25 B.R. 545 (Bankr. S.D. Cal. 1982), cited in, e.g., Alliger, 78 B.R. at 99; Chisari, 183 B.R. at 966; Coleman, 98 B.R. at 447; Frech, 62 B.R. at 236 n.1.

[FN135]. 260 U.S. 592, 595, 43 S. Ct. 219, 220 (1923).

[FN136]. Norman, 25 B.R. at 548-49 & n.3. Regarding the synonymity of the “affirmative defense” and “exception to the exception” rationales, compare Stone v. Stone (In re Stone), 199 B.R. 753, 781 (Bankr. N.D. Ala. 1996) (the Ability to Pay and Detriment standards under § 523(a)(15) are exceptions within an exception “and as such [are] affirmative defenses”) with Scigo v. Scigo (In re Scigo), 208 B.R. 470, 473 (Bankr. D. Neb. 1997) (concluding that Stone found that those standards were not affirmative defenses but, rather, were exceptions within the exception). Stone claimed that the burden was being “placed” upon the debtor rather than being “shifted” to him/her, Stone, 199 B.R. at 780, implying the existence of two separate ultimate issues.

[FN137]. See NYSHESC v. Kohn (In re Kohn), 5 Bankr. Ct. Dec. (CRR) 419, 420 (Bankr. S.D.N.Y. 1979); supra notes 65-67 and accompanying text.

[FN138]. Norman, 25 B.R. at 548, (citing Williams v. Administrator of the Nat’l Aeronautic & Space Admin., 463 F.2d 1391, 1400 (C.C.P.A. 1972)).

[FN139]. Williams, 463 F.2d at 1400. See supra note 122 & infra note 153 (regarding such rules).

[FN140]. See supra note 105 (burden of persuasion never shifts); Greenwich Collieries, 512U.S. at 273, 114 S. Ct. at 2255-56 (Hill v. Smith clearly and correctly distinguished burdens of persuasion and production; burden of proving a fact may shift, but “the only time the burden of proof-as opposed to the burden to produce evidence-might shift is in the case of affirmative defenses”); Hill v. Smith, 260 U.S. at 593-95, 43 S. Ct. at 219- 20 (repeated references to the parties’ duty to “offer evidence”; no mention of affirmative defenses; if burden of persuasion were at issue, use of same rationale for placing same burden on both parties sequentially might imply that both were asserting affirmative defenses “by the same principle”); In re Farmers’ & Merchants’ Bank of Janes, Eby v. Waltz, 286 F. 924, 926 (6th Cir. 1923) (Hill v. Smith illustrates “the elementary rule that one who relies upon an exception or upon an impeachment of the prima facie situation carries the burden of proof”); infra notes 157-63 and accompanying text (regarding affirmative defenses).

[FN141]. See Hill, 260 U.S. at 594-95, 43 S. Ct. at 220 (1923) (quoting Bankruptcy Act of July 1, 1898, ch. 541, § 17a(3), 30 Stat. at L. 550, amended in Act of February 5, 1903, ch. 487, § 5, 32 Stat. at L. 798, Comp. Stat. § 9601, as follows: [A discharge] shall release a bankrupt from all of his provable debts, except such as. . . (3) have not been duly scheduled in time for proof and allowance, with the name of the creditor if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy.)

[FN142]. Id.

[FN143]. See Norman, 25 B.R. at 549 (emphasizing and repeating the “exception to the exception” phrase).

[FN144]. Subsection (8) of 11 U.S.C. § 523(a) is not the only subsection containing such provisos. E.g., § 523(a)(2)(A) & (C) contain an exclusion defining an “other than” clause within a “to the extent” clause; subsection (3) contains several “if” clauses; and subsection (5) contains an “other than” clause and an “unless” clause within a “but not” clause. See 2 McCormick, Evidence § 337 (J. Strong 4th ed. 1992) (distinctions based upon exceptions often produce an arbitrary allocation of burdens).

[FN145]. See Stone v. Stone (In re Stone), 199 B.R. 753, 770 (Bankr. N.D. Ala. 1996) (courts do not apply exceptions to exceptions under § 523(a)(3) and § 523(a)(5)); cf. id. at 771 (legislative history of § 523(a)(15), in H.R. Rep. No. 103-835, at 54 (1994), is silent on burden of proof (despite many years of judicial speculation on similar issue under § 523(a)(8))).

[FN146]. See, e.g., Butler v. Butler (In re Butler), 186 B.R. 371, 374 (Bankr. D. Vt. 1995) (§ 523(a)(8)(B) “may or may not” contain such a shift but (a)(15) does not); Dressler v. Dressler (In re Dressler), 194 B.R. 290, 303-04 (Bankr. D.R.I. 1996) (same); Morris v. Morris (In re Morris), 197 B.R. 236, 243 (Bankr. N.D.W.Va. 1996) (burden of persuasion is on the creditor under § 523(a)(15)); but see, e.g., Hill v. Hill (In re Hill), 184 B.R. 750, 753 (Bankr. N.D. Ill. 1995) (burden under subsection (a)(15) is on debtor).

[FN147]. Compare e.g., Chisari, 183 B.R. at 966-67 (burden on debtor) with e.g., Alleshouse v. Student Assistance Comm’n, 565 N.E.2d 340, 342 (Ind. App. 3 Dist. 1991) (burden on creditor).

[FN148]. Stonybrook Tenants Ass’n v. Alpert, 29 F.R.D. 165, 167 (D. Conn. 1961).

[FN149]. Norman, 25 B.R. at 549 n.3.

[FN150]. Stonybrook, 29 F.R.D. at 167.

[FN151]. See, e.g., infra notes 355-61 & 367-86 and accompanying text.

[FN152]. Norman, 25 B.R. at 549.

[FN153]. See 9 Wigmore, Evidence § 2486 (Chadbourn rev. 1981) (this consideration takes its place among other considerations of fairness and experience); 2 McCormick, Evidence § 337 (J. Strong 4th ed. 1992) (very often one must plead and prove matters as to which his adversary has superior access to the proof); 31A C.J.S. Evidence § 120 (1996) (knowledge about a particular fact is one of several principles upon which a court may determine that the normal allocation of the burden of proof should be altered; others include the availability of evidence, the best public policy result in the absence of proof of the particular fact, and the probability or improbability of the fact); supra note 122.

[FN154]. The principle that Norman would rely upon is phrased in this narrower way in 29 Am. Jur. 2d, Evidence § 161 (1994).

[FN155]. See infra notes 178-361 and accompanying text.

[FN156]. See e.,g., Fed. R. Civ. P. 8(c), which lists these among its matters “constituting an avoidance or affirmative defense”: accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, and waiver.

[FN157]. See supra note 72 and accompanying text.

[FN158]. Affirmative defenses are derived from the common law plea of confession and avoidance. Flav-O-Rich, Inc. v. Rawson Food Serv., Inc. (In re Rawson Food Serv., Inc.), 846 F.2d 1343, 1349 (11th Cir. 1988) (quoting 5 C. Wright & A. Miller, Federal Practice & Procedure § 1270 (1969)). In that plea, the defending party must admit the adversary’s allegations to such an extent that the adversary has an apparent right. 61A Am. Jur. 2dPleading § 155 (1981). Thus, affirmative defenses do not controvert the adversary’s prima facie case, but instead raise matters extraneous to it. Flav-O-Rich, 846 F.2d at 1349; Hassan v. United States Postal Service, 842 F.2d 260, 263 (11th Cir. 1988). See supra note 156.

[FN159]. Fed. R. Civ. P. 8(c); Hassan v. United States Postal Service, 842 F.2d 260, 263 (11th Cir. 1988).

[FN160]. Fed. R. Civ. P. 8(c) (pleading setting forth affirmative defenses is in response to a prior pleading); Amelio v. Yazoo Mfg. Co., 98 F.R.D. 691, 693 (N.D. Ill. 1983) (affirmative defenses generally admit matters in a complaint).

[FN161]. See supra notes 97-98 and accompanying text.

[FN162]. See supra text accompanying note 68.

[FN163]. Senate Report 95-989, supra note 62, at 79. The version that became law does not differ significantly in this regard from the draft to which Senator DeConcini’s comment pertained. See supra note 66 and accompanying text.

[FN164]. Bankruptcy Commission Report, supra note 27, pt. II at 140 n.16.

[FN165]. Id., pt. II, § 4-506(a)(8), at 136 provided as follows:

(a) Exceptions from Discharge. A discharge extinguishes all debts of an individual debtor, whether or not allowable, except the following: . . . (8) any educational debt if the first payment of any installment thereof was due on a date less than five years prior to the date of the petition and if its payment from future income or other wealth will not impose an undue hardship on the debtor and his dependents.

[FN166]. Section 439A produced the same result but was phrased more complexly, allowing for “discharge. . . only if. . . except that . . . only if. . . .” See supra note 30.

[FN167]. The temptation to restructure the student loan debt, see infra note 352, may reflect an intuitive judicial sense that undue hardship is more like a set-off-i.e., a relative adjustment in light of the factors of the case, reducing the amount that creditors should receive-than an absolute bar to recovery. See Washington v. Atchison, Topeka & Santa Fe, 834 P.2d 433, 435 (N.M. 1992) (defendant’s assertion of set-off was not an affirmative defense).

[FN168]. See, e.g., infra text accompanying note 497.

[FN169]. See, e.g., infra notes 267-72 and accompanying text.

[FN170]. See infra note 266 and accompanying text.

[FN171]. See infra notes 233-47 and accompanying text.

[FN172]. See supra notes 14-26 and accompanying text.

[FN173]. Some opinions have placed the entire burden of persuasion on the creditor. See, e.g., infra note 526 and accompanying text and Petition for Certiorari, TSAC v. Cheesman, No. 94-809 (U.S. 1995), at 13-14 (creditor stated that Sixth Circuit put burden of proof on creditor); Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 919 (Bankr. E.D. Pa. 1987) (putting “the burden of both proof and persuasion” on lender to prove an absence of undue hardship if debtor’s income falls below poverty level); Carter v. Kent State Univ. (In re Carter), 29 B.R. 228, 232 (Bankr. N.D. Ohio 1983) (creditor failed to present evidence that debtors’ finances would improve); Fox v. PHEAA (In re Fox), 163 B.R. 975, 978 (Bankr. M.D. Pa. 1993) (burden of persuasion is on the creditor); Hornsby v. TSAC (In re Hornsby), 201 B.R. 195, 200 (Bankr. W.D. Tenn. 1995) (creditor was required to supply proof that debtors’ financial situation would improve in foreseeable future).

[FN174]. Besides relying on the Norman rationale, the court in Coleman v. HEAF (In re Coleman), 98 B.R. 443 (Bankr. S.D. Ind. 1989) also reasoned that the burden of persuasion also had to shift to the debtor because of the statute’s self-executing nature. Id. at 447; see supra text accompanying note 62. But Coleman simultaneously admitted that the creditor necessarily bears a partial burden of proof as soon as a complaint is filed. Id. It is not clear why a self-executing feature that allows the creditor to bear an initial burden of persuasion must prohibit the full allocation of that burden to that party.

[FN175]. See supra text accompanying note 119.

[FN176]. See, e.g., infra text accompanying note 368.

[FN177]. Similarly for the burden of production. See infra note 250 and accompanying text.

[FN178]. See supra text accompanying note 124.

[FN179]. See supra note 121 and accompanying text.

[FN180]. See supra note 108 and accompanying text.

[FN181]. See supra text accompanying note 71.

[FN182]. See, e.g., Dakota Wesleyan Univ. v. Nelson (In re Nelson), 188 B.R. 32, 33 (D.S.D. 1995) (amounts debtor owed to school for tuition and other services were not an educational benefit overpayment or loan, because no funds changed hands, and were therefore dischargeable); N.M. Institute of Mining & Technology v. Coole (In re Coole), 202 B.R. 518, 519 (Bankr. N.M. 1996) (debtor’s note promising payment for services, e.g., housing charges, was not a loan, because no money changed hands; discharged); but see Andrews Univ. v. Merchant (In re Merchant), 958 F.2d 738, 741 (6th Cir. 1992) (extensions of credit by university, evidenced by promissory note, are loans under § 523(a)(8)).

[FN183]. The FFEL program includes the Federal Stafford Loan Program, Federal Supplemental Loans for Students, the Federal Plus Program, and the Federal Consolidation Loan Program. 34 C.F.R. § 682.100(a) (1996). Federal Stafford Loans were originally known as Guaranteed Student Loans (“GSL”), which was the name given to the corresponding loanprogram (the “GSLP”) under the Higher Education Act of 1965, Pub. L. No. 89-329, Title IV, Part B, as amended by Pub. L. No. 99-498, Title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1353. The name was changed to the “Robert T. Stafford Student Loan Program” in 1988. See 20 U.S.C. § 1071(c). Other federal loan programs include the FISL, ALAS, PLUS, Perkins (formerly NDSL), HPSL, HEAL, and NSLP programs. 34 C.F.R. § 682.100(a)(4) (1996).

[FN184]. Bureau of the Census, U.S. Dep’t of Commerce, Statistical Abstract of the United States [hereinafter cited as Statistical Abstract], table 288 (1996) (the major federal student financial assistance programs involving loans since 1970 have been the FFEL and Perkins programs, utilizing annual loan funds (in 1992) of $14.7 billion and $868 million, respectively).

[FN185]. See, e.g., 34 C.F.R. § § 682.200 & 682.209 (1996); see also Chisari v. Florida Dep’t of Educ. (In re Chisari), 183 B.R. 963, 967-68 (Bankr. M.D. Fla. 1995) (rejecting argument that loans did not come due until creditor sent a repayment schedule to debtor).

[FN186]. See 34 C.F.R. § § 682.210 & 682.211 (1996) (combining, respectively, the deferment and forbearance provisions applicable to student loans arising under a number of different statutes); see also 34 C.F.R. § 682.402(m) (1997) (defining applicable suspension).

[FN187]. Deferments are specified in the Senate Report explaining the origin of the “applicable suspensions” phrase in § 523(a)(8)(A). S. REP. No. 96- 230, at 2-3, reprinted in 1979 U.S.C.C.A.N. 936, 937-38 [hereinafter cited as Senate Report 96-230]. See Huber v. Marine Midland Bank (In re Huber), 169 B.R. 82, 86 (Bankr. W.D.N.Y. 1994) (deferments are precisely what Congress had in mind when it used the phrase “applicable suspension of the repayment period”). Deferments are a right of the borrower within the terms of the loan agreement. But see infra notes 352 & 491 (regarding unauthorized judicial deferments); infra text accompanying notes 449-57 and accompanying text (opinions requiring debtor to seek deferments); compare Huber, 169 B.R. at 87 (deferments are applicable suspensions even if they violate federal regulations, as long as the parties agree to them) with infra notes 227-28 (congressional emphasis on compliance with regulations).

[FN188]. Although forbearances have been available since the enactment of § 523(a)(8), see, e.g., 45 C.F.R. § 177.512 (1979), they are not mentioned in Senate Report 96-230, supra note 187, because, unlike deferments, they are generally granted at the lender’s discretion, and therefore do not allow the kind of manipulation, by the debtor, addressed in that Senate Report, contra Eckles v. Wisconsin Higher Educ. Corp. (In re Eckles), 52 B.R. 433, 435 (E.D. Wis. 1985). It is entirely possible for the lender, in its discretion, to fail to grant them, without leaving the debtor any remedy. 34 C.F.R. § 682.211(a)(2)(i) (1996); see, e.g., Robinson v. United States Dep’t of Educ. (In re Robinson), 193 B.R. 967, 968 (Bankr. N.D. Ala. 1996) (denying or ignoring request for forbearance). They are granted for the benefit of the lender as well as the borrower, to avoid or minimize the consequences of default. 34 C.F.R. § 682.211(a) (1996). It is possible that, in its post- 1978 inattention to § 523(a)(8), see, e.g., supra note 47 and accompanying text, Congress has not kept track of the original concept distinguishing deferments from forbearances. See infra note 396 (in United States Code Title 20, Congress has subsequently created forbearances that lenders must allow); cf. Cobb v. United Student Aid Funds, Inc. (In re Cobb), 196 B.R. 34, 37 n.5 (Bankr. E.D. Va. 1996) (courts have conflicting views on the strength of authority that provisions under Title 20 provide on interpretation of § 523(a)(8)).) Some courts have erroneously interpreted “applicable suspension” broadly against the debtor to include forbearances. See Georgina v. HEAF (In re Georgina), 124 B.R. 562, 564 (Bankr. W.D. Mo. 1991) (approach of Eckles, as followed in Shryock v. Pittsburg State Univ. (In re Shryock), 102 B.R. 217, 219 (Bankr. D. Kan. 1989), broadly interpreted “applicable suspension”); Virginia State Educ. Assistance Auth. v. Gibson (In re Gibson), 184 B.R. 716, 718-19 (E.D. Va. 1995), aff’d, 86 F.3d 1150 (4th Cir. 1996) (automatic stay under previous bankruptcy filing is an applicable suspension). Regulations now echo this approach, even while acknowledging the lender’s generally unilateral discretion. See 34 C.F.R. § 682.402(m)(1) & (2) (1997) (suspension begins when lender grants forbearance and continues as long as lender does not demand payment). Besides ignoring Senate Report 96-230, the approach of treating forbearances as applicable suspensions potentially reduces the creditor’s incentive to seek repayment of principal, and also bars some debtors freedom ever obtaining relief under § 523(a)(8), by allowing or requiring creditors to keep certain loans in a suspended, nondischargeable state indefinitely. See 34 C.F.R. § 682.402(m)(3)(i) (1997) (implying e.g., that, once begun, an applicable suspension based on a hardship forbearance may continue forever if the hardship does not end); infra notes 245 & 335 and accompanying text. See also supra note 45 (effect of Chapter 13 filing under § 523(a)(8)(A)). For this reason, the debtor considering a bankruptcy filing under subsection (A) may prefer to avoid forbearances, thereby frustrating the default-preventive intent of Congress. See infra notes 453-57 and accompanying text.

[FN189]. Depending upon the terms of the particular loan, debtors have potential access to a wide variety of grounds for deferments and forbearances. See 34 C.F.R. § § 682.210(b) & 682.211(a)(1) (1996). Older and newer statutes, regulations, and loan agreements under the same loan program may not present identical lists of allowable deferments. Compare e.g., 45 C.F.R. § 177.508(b) (1979) with e.g., 34 C.F.R. § 682.210(b) (1996).

[FN190]. See supra notes 187-89.

[FN191]. See 34 C.F.R. § 682.200 (1996) (repayment period on student loans generally limited to 10 years, exclusive of periods of deferment and forbearance, but consolidation loans can extend 30 years). See generally Student Loan Marketing Association (“Sallie Mae”), (last modified Jan. 8, 1998) <http://www.salliemae.com> ((800) 524-9100) (loan consolidation information); infra note 234 (consolidation restarts the 7-year clock under § 523(a)(8)(A)).

[FN192]. See 20 U.S.C. § 1091a(b)(1) and 34 C.F.R. § 682.202(c) through (g) (1996) (fees authorized for loan origination, loan insurance, refinancing, late charges, and collection charges including attorney’s fees, court costs, and telegrams); 34 C.F.R. § § 682.208 & 682.507 (1996) (creditor required to exercise due diligence in loan collection); infra note 352 (restructuring the debt sometimes eliminates such fees).

[FN193]. Raimondo v. NYSHESC (In re Raimondo), 183 B.R. 677, 681 (Bankr. W.D.N.Y. 1995). See infra notes 325-39 and accompanying text (detailed review of such calculations).

[FN194]. See 20 U.S.C. § 1094(a)(3) (eligible institutions under the student loan program must maintain records necessary to ensure proper and efficient administration of funds received from the Department of Education and from students); Conn. Student Loan Found. v. Keenan (In re Keenan), 53 B.R. 913, 916 (Bankr. D. Conn. 1985) (creditor is required to keep necessary records); 34 C.F.R. § 682.414(a)(1)(ii)(C) (1997) (guarantors are required to maintain payment history showing date and amount of each payment, and amounts attributed to principal, accrued interest, and collection costs and other charges); 34 C.F.R. § 682.414(a)(4)(ii) (1997) (lenders required to maintain similar history, as well as evidence of borrower’s eligibility for deferments and documents required for forbearance); 34 C.F.R. § 682.515(a)(1) & (2) (lender must maintain complete and accurate loan records for five years after loan is repaid in full or lender is reimbursed on a claim); cf. Robinson v. United States Dep’t of Educ. (In re Robinson), 193 B.R. 967, 969 n.3 (Bankr. N.D. Ala. 1996) (creditor’s showing of the existence of a valid educational debt does not require statement of the amount of the debt; such amount becomes relevant only when debtor asserts undue hardship).

[FN195]. See, e.g., Conner v. Illinois State Scholarship Comm’n (In re Conner), 89 B.R. 744, 750 (Bankr. N.D. Ill. 1988) (creditor proposed a graduated repayment schedule); Hawkins v. Buena Vista College (In re Hawkins), 187 B.R. 294, 300 (Bankr. N.D. Iowa 1995) (creditor asked court to fashion a sliding scale for repayment); see infra note 352 (complex debt restructurings).

[FN196]. See 34 C.F.R. § § 682.402(f)(5)(I), 682.402(g)(1)(v)(B), 682.402(h)(ii), 682.402(I)(1)(I)(b) (1997) (upon debtor’s bankruptcy filing, in order to determine proper response, lender and/or guarantor must determine whether loan has been in repayment for more than seven years, exclusive of applicable suspensions, and whether repayment would impose undue hardship; must prepare and document a statement of facts supporting objection to discharge; must take actions to oppose discharge; and must calculate principal, interest, late charges and collection costs); infra note 207.

[FN197]. See, e.g., Claxton v. Student Loan Marketing Ass’n (In re Claxton), 140 B.R. 565, 570 (Bankr. N.D. Okla. 1992) (debtors denied that interest accrued after Aug. 30, 1991; neither party supplied information or argument on point); Cobb v. United Student Aid Funds, Inc. (In re Cobb), 196 B.R. 34, 35 (Bankr. E.D. Va. 1996) (“sketchy” facts provided to court); Hawkins v. Buena Vista College (In re Hawkins), 187 B.R. 294, 299 (Bankr. N.D. Iowa 1995) (finding no evidence offered on term of repayment period, when loan first came due, or whether debtor had received any deferments); O’Flaherty v. Nellie Mae, Inc. (In re O’Flaherty), 204 B.R. 793, 796 n.9 (Bankr. N.D. Ala. 1997) (finding no testimony offered as to interest rate or creditor’s calculations); Robinson v. United States Dep’t of Educ. (In re Robinson), 193 B.R. 967, 968-69 nn.2 & 3 (Bankr. N.D. Ala. 1996) (expecting debtor to provide evidence was required to decide case on the basis solely of debtor’s testimony and four of her paystubs; loan documents and amounts were not introduced); Petition for Certiorari, TSAC v. Cheesman, No. 94-809 (U.S. 1995), at 29a (creditor allegedly disputed the relevance, in a student loan discharge proceeding, of the actual loan repayment schedule); Petition for Certiorari, Woodcock v. Chemical Bank, No. 94-9242 (U.S. 1995), at 17-18, 28 n.35 (creditor allegedly refused to state total amount sought or number of years that payments would continue and allegedly stated that it had no knowledge as to dates of or reasons for any applicable suspensions or changes in amount due); infra notes 356-61 and accompanying text (pro se debtors unable to prosecute cases effectively).

[FN198]. See supra text accompanying note 52.

[FN199]. Compare Petition for Certiorari, Woodcock v. Chemical Bank, No. 94-9242 (U.S. 1995), at 25 n.30 (creditor allegedly asserted that debtor’s inquiries into total amounts of loans going into bankruptcy were irrelevant) with Petition for Certiorari, TSAC v. Cheesman, No. 94-809 (U.S. 1995), at 15 (creditor cited such figures in its argument); cf. Santa Fe Medical Services, Inc. v. Segal (In re Segal), 57 F.3d 342, 349 (3d Cir. 1995) (discharge granted where student loan fund had already been fully repaid by loan from debtor’s employer).

[FN200]. See, e.g., In re Pelkowski, 990 F.2d 737, 743-44 (3d Cir. 1993) (the purpose of rescuing the fund from fiscal doom is relevant to the question of whether the statute was intended to apply to a particular type of individual); Alibatya v. New York Univ. (In re Alibatya), 178 B.R. 335, 340 (Bankr. E.D.N.Y. 1995) (congressional purpose was to safeguard student loan programs, not student housing facilities).

[FN201]. Compare Ohio Student Loan Comm’n v. Cavazos, 900 F.2d 894, 896- 97 (6th Cir. 1990) (fund had low default rate, thereby qualifying for full reimbursement from Department of Education; fund also received administrative cost allowances from the Department, charged guarantee premiums to participating lenders, and received interest and investment income from its reserves; these factors combined to produce $26 million in excess reserves) with Petition for Certiorari, TSAC v. Cheesman, No. 94-809 (U.S. 1995), at 15 (total amount of student loan debt owed to guaranty agency, by all persons filing bankruptcy, including student loans not sought to be discharged and not actually discharged, averaged $3 million per year; amount had dropped significantly during the first year after the laws governing guarantors were tightened, see infra note 227 and accompanying text).

[FN202]. Permanent Subcommittee on Investigations, of the Committee on Governmental Affairs, Abuses in Federal Student Aid Programs, S. REP. No. 102-58, at 33 (1991) [hereinafter cited as Senate Report 102-58].

[FN203]. Id. at 11-33 passim.

[FN204]. United States General Acct. Off., Report to the Congress: Financial Audit: Guaranteed Student Loan Program’s Internal Controls and Structure Need Improvement (GAO/AFMD 93-20) (March 1993) [hereinafter cited as GAO Report].

[FN205]. See supra note 3.

[FN206]. Admittedly, like many borrowers, rich and poor, some student debtors do not volunteer to give away their money if nobody seems interested in collecting it.

[FN207]. See 20 U.S.C.A. § 1087(b) (West Supp. 1997) (federal government pays holder of loan the unpaid balance of principal and interest when borrower files bankruptcy under Chapter 12 or 13, when s/he files bankruptcy under Chapter 11 (if the loan falls under § 523(a)(8)(A)), or when s/he files bankruptcy under Chapter 7 or 11 and the borrower commences an action to determine dischargeability under § 523(a)(8)(B)).

[FN208]. GAO Report, supra note 204, at 46; Senate Report 102-58, supra note 202, at 28-9.

[FN209]. See, e.g., U.S. General Accounting Office, High Risk Series: Student Financial Aid (GAO/HR 97-11) (Feb. 1997) [hereinafter cited as GAO High-Risk Report] at 35-36 (citing prior GAO study and Department of Education response addressing problem of guarantors spending reserve funds on higher salaries, unnecessary staff and equipment, entertainment, lobbying, promotion, and criminal defense legal fees); id. at 37-38 (Department of Education grants waivers to lenders and guarantors of amounts they owe it for loan refunds and penalties; waivers are poorly documented and are not governed by any formal or consistent approval process).

[FN210]. See infra note 227 (regarding Higher Education Amendments of 1992).

[FN211]. See infra note 275 and accompanying text.

[FN212]. See, e.g., infra note 282 and accompanying text (opinion suggesting that discharge must be more difficult to prove when unemployment increases); infra note 221; Coalition for Student Law Reform (“CSLR”), Statement (Nov. 12, 1997) <www.cslr.org/defaultnov.html> (fifth straight annual drop in student loan default rates, recently announced by the Department of Education, stemmed from continued efforts to eliminate high-risk schools from the loan program, greater borrower counseling at schools, and improved efforts to return delinquent borrowers promptly to a regular repayment schedule).

[FN213]. See Richard Morrison, Comment, Price-Fixing Among Elite Colleges and Universities, 59 U. Chi. L. Rev. 807 (1992) and Anthony DePalma, Ivy Universities Deny Price-Fixing But Agree to Avoid It in the Future, N.Y. Times, May 23, 1991, at A-1, col. 1 (effective rates of tuition at top schools may have been set by price-fixing); Why Colleges Cost Too Much, Time, Mar. 17, 1997, at 46, 49-50 (“Chivas Regal effect” of Ivy League pricing may have encouraged great increases in college tuitions nationwide in the 1980s); Columbia Univ., Graduate School of Business, Financing Your Columbia Business School Education at 12 (1992) (stating, in a discussion of financial aid, that “[d]ecisions about management education should be based on educational opportunities rather than on financial factors”); Statistical Abstract, supra note 184, at 187, table 290 (1996) (in five years, from 1985 to 1990, average tuitions at private two- and four-year colleges rose by 67% and 74%, respectively, while those at public two-year colleges rose only 29%); Jodi L. Edelson, Note, Higher Education to Higher Default: A Re-Examination of the Guaranteed Student Loan Program, 11 Ann. Rev. Banking L. 475, 476 (1992) (the number of students graduating with student loan debt increased 34% between 1977 and 1986); NBRC Report, supra note 44, § 1.4.5 (schools can raise tuitions to take advantage of money flowing in from government-guaranteed loans), citing Ryman, supra note 41, at 221 n.100 (tuition at public law schools rose 171% between 1978 and 1988).

[FN214]. See Senate Report 102-58, supra note 202, at 11-13 (schools exploit loopholes, engage in misleading recruitment practices, and abuse refund rules); see generally infra notes 227-47 and accompanying text (laws governing school behavior).

[FN215]. Cf. United States v. Kephart, 170 B.R. 787, 792-93 (W.D.N.Y. 1994) (amount at issue totalled $625,000).

[FN216]. Regarding the latter, see supra notes 202-08 and accompanying text. There are no known examples of the former. See supra note 201 (examples of good and bad health); USA Group Services, Inc. v. Riley, 82 F.3d 708, 713 (7th Cir. 1996) (liability helps to weed out those poorly performing student loan servicing companies that make mistakes and thus cost the federal government money).

[FN217]. 20 U.S.C.A. § 1087-1(c)(2) & (6) (West Supp. 1997) (origination fees may not exceed 5% of principal). See infra note 219.

[FN218]. 20 U.S.C.A. § 1077(a)(2)(I) (West Supp. 1997) (the lender can ordinarily charge the debtor a loan insurance premium equal to the loan insurance premium charged to the lender by the Department of Education); 34 C.F.R. § 682.202(d) (1997) (premium may not exceed 1% of principal); cf. supra note 34 (bankruptcy discharges before creation of student loan exception to discharge were less than 1% of total loans).

[FN219]. The Perkins and Stafford loan programs were the major programs during the period 1974-1993. Supra note 184. Loans by those programs during that period totaled about $170 billion. Statistical Abstract, supra note 184, at 186, table 288 (1996), table 267 (1992 and 1990), table 259 (1985), table 274 (1981) (using later years in case of adjustment). For purposes of discussion, with fees at 6%, see supra notes 217 & 218, the amount collected would be approximately $10.2 billion. Such fees are normally extracted from the face amount of the loan. 34 C.F.R. § 682.202(c)(4) (1997). Hence, the amount actually loaned, on these figures, would have been $159.8 billion, and the effective fee would have been about 6.4% of principal.

[FN220]. Again, one cannot expect student-paid loan insurance to protect against the limitless losses that institutional malfeasance may produce. See supra note 212.

[FN221]. Statistical Abstract, supra note 184, at 186, table 288 (1996) (cumulative current defaults of approximately $19.6 billion in the Perkins and FFEL programs; default rates in 1990 of 6.2% and 10.4%, respectively, compared favorably to 1980’s rates of 11.6% and 10.1%, respectively.

[FN222]. See supra note 34.

[FN223]. See supra note 218.

[FN224]. See Bega v. United States Dep’t of Educ. (In re Bega), 180 B.R. 642, 643-44 (Bankr. D. Kan. 1995) (debtor’s course of action against Secretary of Education for non-bankruptcy discharge of debt due to closing of school, see infra note 237, does not create a route to bankruptcy discharge that is distinct from § 523(a)(8) subsections (A) and (B)).

[FN225]. See infra text accompanying note 252.

[FN226]. See, e.g., Bankruptcy Act Revision: Hearings on H.R. 31 and H.R. 32 before the Subcomm. on Civil and Constitutional Rights of the comm. on the judiciary, 94th Cong., 1072, 1100 (1976) (statement of Rep. Eshleman) (rationale for protecting governmental loans does not extend to loans made for profit) [hereinafter cited as Revision Hearings]; Craig v. PHEAA (In re Craig), 64 B.R. 854, 855-56 (Bankr. W.D. Pa. ), appeal dismissed, 64 B.R. 857 (W.D. Pa. 1986) (qualification of creditor as an “eligible lender” under 20 U.S.C. § 1087-3 arises before consideration of the issue of undue hardship); see infra notes 227-47 and accompanying text.

[FN227]. See, e.g., 20 U.S.C.A. § 1082(g) (West 1990 & Supp. 1997) (granting Secretary of Education the authority to impose civil penalties up to $25,000 per violation upon lenders and guaranty agencies for failure to comply with statute and regulation); 20 U.S.C.A. § 1082(h)(1)(A) (West 1996) (granting Secretary authority to limit, suspend, or terminate lenders not exercising reasonable care and diligence, see supra note 192); 20 U.S.C.A. § 1094(a)(6) (West Supp. 1997) (forbidding schools to certify students for loans exceeding statutory limits); 20 U.S.C.A. § 1094(a)(16) (West Supp. 1997) (prohibiting schools from employing, in fund administration, individuals convicted of, or pleading nolo contendere or guilty to, certain financial crimes); H.Rep. No. 102-447, at 10 (1992), reprinted in 1992 U.S.C.C.A.N. 334, 343 (Higher Education Amendments of 1992, Pub. L. No. 102-325, 106 Stat. 448 (1992), codified at 20 U.S.C. § § 1001–1146a, included nearly 100 provisions to strengthen controls on schools to end waste and abuse and minimize loan defaults); 34 C.F.R. § 682.502(b)(2) (1997) (in determining whether to enter into guarantee agreement with a lender, the Department of Education considers whether the applicant is capable of complying with regulations); 34 C.F.R. § 682.503(a)(2) (1997) (guarantee agreement requires lender to comply with all laws, regulations, and other applicable requirements); Student Loan Marketing Ass’n v. Riley, 104 F.3d 397, 400 (D.C. Cir. 1997) (federal loan guarantee and interest payments are contingent on compliance with elaborate procedures that control every aspect of student loans). Cf. USA Group Services, Inc. v. Riley, 82 F.3d 708, 711 (7th Cir. 1996) (servicing companies hired by student lenders can cost the federal government money if they make a mistake; regulations thus impose strict liability, joint and several, upon servicers).

[FN228]. See 34 C.F.R. § 682.513(a)(2) (1997) (Secretary of Education penalizes non-compliant lender by automatically deducting, from its claim for reimbursement, any amount that is not a legally enforceable obligation of the debtor, excepting the defense of infancy). Cf. 34 C.F.R. § 685.206(c)(1) (1997) (an illegal act or omission by a school may provide the basis for a defense against repayment of a federal direct student loan). See generally Bryant v. Better Bus. Bureau of Greater Md., 923 F. Supp. 720, 736 (D. Md. 1996) (constructions which render regulatory provisions superfluous are to be avoided); Brannan v. United Student Aid Funds, Inc., 94 F.3d 1260, 1263-66 (9th Cir. 1996), cert. denied, 117 S. Ct. 2484 & 2496 (1997) (Congress authorized Secretary of Education to develop a uniform national standard for GSL debt collection activity; the Secretary’s implementation of congressional intent is not arbitrary, capricious, or manifestly contrary to statute; GSL regulations thus preempt state regulations on GSL debt collection); Cathy Lesser Mansfield, The Federal Trade Commission Holder Rule and Its Applicability to Student Loans-Reallocating the Risk of Proprietary School Failure, 26 Wake Forest L. Rev. 635, 640-41 (1991) (regarding defenses to loan collection efforts based upon lender misconduct); infra note 274.

[FN229]. See infra notes 356-60 and accompanying text (limits on debtors’ ability to litigate effectively).

[FN230]. See supra note 192.

[FN231]. See infra note 245 (examples of failure to collect).

[FN232]. See, e.g., Woodcock v. Chemical Bank (In re Woodcock), 45 F.3d 363, 366-67 (10th Cir. 1995) (terms of promissory note were unambiguous and supported by testimony, and creditor could not change them unilaterally).

[FN233]. See Santa Fe Med. Servs., Inc. v. Segal (In re Segal), 57 F.3d 342, 348 (3d Cir. 1995), criticizing Najafi v. Cabrini College (In re Najafi), 154 B.R. 185 (Bankr. E.D. Pa. 1993) (Scholl, J.) (Najafi denied discharge based on broad reading of § 523(a)(8) even though college failed to follow its normal policies requiring student to register and pay tuition before attending classes; Third Circuit criticism was based on failure to require the existence of an educational program pursuant to § 523(a)(8)).

[FN234]. See A.L. Lee Memorial Hosp. v. McFadyen (In re McFadyen), 192 B.R. 328, 333 (Bankr. N.D.N.Y. 1995) (loan was made for business purposes, linking debtor’s education to employment for plaintiff, not for educational purposes, and thus did not come within § 523(a)(8)); Santa Fe Med. Servs., Inc. v. Segal (In re Segal), 57 F.3d 342, 349 (3d Cir. 1995) (same); compare id. (focus of statute is on nature and character of loan, not how recipient actually spent the money) and Kraft v. NYSHESC (In re Kraft), 161 B.R. 82, 85 n.3 (Bankr. W.D.N.Y. 1993) (noting but not influenced by fact that a portion of the student loan went for car payments, possibly on school’s advice) with Ealy v. First Nat. Bank of Matton (In re Ealy), 78 B.R. 897, 898 (Bankr. C.D. Ill. 1987) (discharged because state failed to demonstrate what portion of loan, having been used to buy a truck and pay off loan on wife’s automobile from same bank, was not for educational purposes); compare Segal, 57 F.3d at 347 (creditor was first required to prove that loan was for educational purposes) with Cobb v. United Student Aid Funds, Inc. (In re Cobb), 196 B.R. 34 passim (Bankr. E.D. Va. 1996) (consolidation loan, obtained in 1994 in an evidently vain attempt to avoid bankruptcy, completely paying off a 1981 educational loan that would have been dischargeable if debtor had filed bankruptcy instead of seeking consolidation, is an educational loan, and therefore an additional seven years must run before it becomes dischargeable under § 523(a)(8)(A)) and Hiatt v. Indiana State Student Assistance Comm’n (In re Hiatt), 36 F.3d 21, 23 (7th Cir. 1994) (consolidation loan restarts the seven-year period of § 523(a)(8)(A). See also supra note 200 and infra notes 283 (regarding noneducational services the school may provide) & 287 (schools advise students to include noneducational expenses in loan budget calculations). It may not be prudent, in any event, to assert that the loan was, in fact, used for a non-educational purpose unbeknownst to the creditor. See 20 U.S.C. § 1097(a) (providing criminal penalties for obtaining educational benefit funds by fraudulent misrepresentation of the purpose of the loan); see, e.g., United States v. Redfearn, 906 F.2d 352, 353 (8th Cir. 1990); United States v. Ranum, 96 F.3d 1020, 1027 (7th Cir. 1996).

[FN235]. See 20 U.S.C. § 1091(c); Woodcock v. Chemical Bank, 45 F.3d 363, 366 (10th Cir. 1995) (finding loan eligibility was conditioned upon the student making satisfactory progress in his course of study) (citing 20 U.S.C. § 1088f(e)(1) (1976)); 34 C.F.R. § 668.34 (1996); 34 C.F.R. § 682.402(e)(3) (1997) (automatic discharge if school falsely certifies student’s ability to benefit from the proffered training and student does not obtain employment from that training); infra note 266 (cases granting discharge for debtors who did poorly in school); cf. Infra note 283 (schools advise borrowers that they must repay regardless of their employability); compare Malloy v. United States (In re Malloy), 155 B.R. 940, 942, 946-47 (E.D. Va. 1993), rev’g 144 B.R. 38 (Bankr. E.D. Va. 1992), aff’d, 23 F.3d 402 (4th Cir. 1994) (finding debtor was arguably underemployed; income was $11,534 and had increased steadily from beginning income of $3,754) with 144 B.R. 38, 39-41, 44 (debtor whose nondischarge would be “unconscionable,” see infra text accompanying note 390, had been “not able to function in the medical school environment”; the debt was $62,759 with interest accruing at $485.70 per month; his mother bought his clothes for him, see infra note 402; his expense calculation left out essentials, see infra note 359; his efforts to obtain higher-paying jobs had failed; he stuttered and displayed a remoteness and unresponsiveness that the trial court attributed to a general difficulty in performing; he seemed fortunate to be making as much money as he was; and his background, as a black medical student, may have included an effort by the medical school to acquire him despite his obvious inabilities).

[FN236]. See, e.g., Connecticut Student Loan Found. v. Keenan (In re Keenan), 53 B.R. 913, 917 (Bankr. D. Conn 1985); Georgina v. HEAF (In re Georgina), 124 B.R. 562, 564 (Bankr. W.D. Mo. 1991); see also Whitehead v. University of Cincinnati (In re Whitehead), 31 B.R. 381, 383, 385 (Bankr. S.D. Ohio 1983) (student’s failure to provide required notification did not override university’s failure to follow proper deferment procedure); Chisari v. Florida Dep’t of Educ. (In re Chisari), 183 B.R. 963, 968 (Bankr. M.D. Fla. 1995) (debtor’s failure to notify creditor of her withdrawal from school was a default, not a factor extending the grace period); but see supra note 187 (regarding Huber) and infra note 244 (regarding Lucianna).

[FN237]. Woodcock v. Chemical Bank, 212 B.R. 658, 660 (D. Colo. 1997) (noting that the bankruptcy court discharged a student loan that, when combined with other loans, exceeded maximum amount permitted by federal regulations when loan was made); see also 20 U.S.C. § 1087(c)(1)(1994) (loans will be discharged, regardless of bankruptcy, where school closes or falsely certifies student’s eligibility to borrow); 34 C.F.R. § 682.603(d) (1996) (college or university may not certify excessive loan amounts).

[FN238]. See 34 C.F.R. § § 668.17, 682.601(a)(6) (1996) (if default rates rise above certain percentages, colleges and universities must take countermeasures or risk cutoff of participation in loan programs); Oliver B. Pollack & David G. Hicks, Student Loans, Chapter 13, Classification of Debt, Unfair Discrimination and the Fresh Start after the Student Loan Default Prevention Initiative Act of 1990, 1993 Detroit Coll. of L. Rev. 1617, 1619 n.10 (citing report that more than 900 colleges might be excluded from participation in federal student loan programs because of high default rates).

[FN239]. Cf. Kevin P. McJessy, Contract Law: A Proper Framework for Litigating Educational Liability Claims, 89 Nw. U.L. Rev. 1768, 1774-84 (1995) (educational “malpractice” claims can be brought under theories of negligence, misrepresentation, statutory liability, constitutionality, and contract); Keams v. Tempe Technical Institute, Inc., 39 F.3d 222, 227 (9th Cir. 1994) (federal student loan regulations do not preempt suits against college accrediting agencies); see infra notes 285-88 and accompanying text (regarding value of the education).

[FN240]. See 20 U.S.C. § 1094(a)(20) (prohibiting colleges and universities from providing incentive payment to recruiting, admissions, and financial aid personnel based on success in securing enrollments or financial aid); 20 U.S.C. § 1094(a)(8) (colleges and universities advertising job placement rates to attract students must make statistics thereon available to prospective students); infra note 266 (cases discharging debts for students who were sold a worthless education) and accompanying text; see also Charles E. Daye, Ethics in Law School Recruitment and Admissions, The Bar Examiner (Feb. 1994) 15, 17-18 (law schools should provide broad information from which the prospective student can make decisions about his/her prospects regarding successful completion of law school, passing bar exam, securing employment, anticipated salary range, and student loan debt).

[FN241]. See, e.g., 20 U.S.C. § § 1092(a) & (b) (information dissemination and exit counseling for borrowers); infra note 283 (initial counseling).

[FN242]. 34 C.F.R. § § 674.41(a)(2), 682.208(c)(1) (1996); see, e.g., Ford v. NYSHESC (In re Ford), 22 B.R. 442, 445 (Bankr. W.D.N.Y. 1982) (debtor received no response to her inquiries). Free information sources may help answer debtors’ specific questions. See, e.g., U.S. Department of Education Debt Collection Service, (last modified Jan. 11, 1997) <http:// http://www.ed.gov/offices/OPE/DCS> (“A Student Loan Borrower’s Guide to Defaulted Student Loans”); U.S. Department of Education’s Federal Student Aid Information Center ((800) 433-3243) (providing information pertaining to status of one’s student loans, to the extent that the holder of the loan has provided such information to the Department); see generally, e.g., The Coalition for Student Loan Reform (“CSLR”), (last visited Feb. 24, 1998) <http:// http://www.cslr.org/alphalist.htm> (“a nationwide group of state and nonprofit organizations that administer and fund the federal guaranteed student loan program,” providing links to a number of student loan topics and loan program participants, including phone numbers).

[FN243]. See supra note 194 and accompanying text. See, e.g., Mayer v. PHEAA (In re Mayer), 198 B.R. 116, 128 (Bankr. E.D. Pa. 1996) (debtor’s record of payments made to creditor was more accurate than creditor’s record); Woodcock v. Chemical Bank, 212 B.R. 658, 661 (D. Colo. 1997) (creditor that says it granted no deferments held to have granted deferments that were not authorized).

[FN244]. 20 U.S.C. § 1078-7(a) (1994). A single lump-sum disbursement increases the risk of accidental loss or premature expenditure of the funds on non-educational emergencies, as well as locking in the maximum debt even if the debtor fails to enroll in e.g., the second semester of the academic year for which the funds were intended. Compare, e.g., NYSHESC v. Lucianna, 666 A.2d 173, 174-75 (N.J. Super. A.D. 1995) (creditor disbursed loan in lump sum in autumn 1981; debtor withdrew from school two months later; debtor failed to notify creditor of withdrawal; debtor sought to exclude remainder of academic year from calculation under § 523(a)(8)(A); court held against debtor on grounds that state agency guarantors cannot be expected to police debtors’ enrollment statuses) with 8 NYCRR Part 2103.9 (1980) (New York regulation requiring disbursements to be made semester-by-semester) and 45 C.F.R. § 177.401(b)(6)(iv) (1979) (loan check may not be mailed earlier than reasonably necessary to meet cost of attendance for period of enrollment for which loan is made); see also supra note 20 (convenience of state agency is preempted by federal regulations).

[FN245]. See, e.g., Chisari v. Florida Dep’t of Educ. (In re Chisari), 183 B.R. 963, 968 (Bankr. M.D. Fla. 1995) (despite passage of more than seven years since loans first came due, it is unclear what actions, if any, creditor took to collect); Cobb v. United Student Aid Funds, Inc. (In re Cobb), 196 B.R. 34, 35 (Bankr. E.D. Va. 1996) (loan had been due for at least seven years; no deferments or forbearances had been granted during those years; and yet amount remaining due was significant enough to persuade debtor to refinance it with a consolidation loan); compare Malloy v. United States (In re Malloy), 155 B.R. 940, 944, 947 (E.D. Va. 1993), aff’d, 23 F.3d 402 (4th Cir. 1994) (record contains no explanation of creditor’s failure to institute collection proceedings until nearly seven years after debtor was dismissed from school) with supra note 235 (Mr. Malloy had been experienceing significant hardship); see supra notes 189 (forbearances) & 192 (creditor required to exercise due diligence); infra note 333 and accompanying text (recommended approach in such cases).

[FN246]. 20 U.S.C. § 1080a(a)(1994). Failure to so disclose could contribute to the fact or magnitude of bankruptcy by enabling indebtedness to other creditors that would not have occurred but for the nondisclosure. Cf. Thompson v. NYSHESC, 751 F. Supp. 868, 870 (D. Or. 1990) (under breach of contract action, student lender’s alleged misrepresentation of debtor’s credit record posed potentially irreparable harm to debtor’s credit reputation).

[FN247]. See infra notes 274-75 (contract defenses).

[FN248]. See infra note 308.

[FN249]. Supra note 177 and accompanying text.

[FN250]. See Simpson v. Home Petroleum Corp., 770 F.2d 499, 503 (5th Cir. 1985) (quoting 2 Roy R. Ray, Texas Law of Evidence § 47 (3d ed. 1980)) (burden of production shifts only when the proponent’s evidence is sufficient to entitle him to a ruling that the opponent shall lose if he fails to come forward with evidence).

[FN251]. See, e.g., In re Roberson, 999 F.2d 1132, 1135 (7th Cir. 1993) (court in leading case began by examining debtor’s finances, rather than with an inquiry into the debtor’s good faith, because financial information was concrete and readily obtainable).

[FN252]. Compare e.g., id. at 1138 (court never reached the question of good faith) with e.g., infra note 431 and accompanying text (case-by-case alternative); see infra notes 391 (other undue hardship statute requires balancing a number of factors) & 442 (regarding Roberson) and accompanying text.

[FN253]. See supra notes 27-50 and accompanying text (confused history of the statute) and infra notes 367-73 and accompanying text (judicial difficulty in construing that history).

[FN254]. See supra text accompanying note 53.

[FN255]. See supra note 216.

[FN256]. In re Pelkowski, 990 F.2d 737, 742 (3d Cir. 1993).

[FN257]. It was suggested that abuse would exist only if at least 80% of the debtor’s debts were educational debts. House Report 95-595, supra note 16, at 133 (1977). But the Committee of the Whole rejected an amendment that would have limited the exception to debtors whose student loans comprised more than 65% of their total debt, implying a belief that abuse can occur below that level. See Organ, supra note 33, at 1099 n.72 (citing 124 Cong. Rec. H1798 (daily ed. Feb. 1, 1978)).

[FN258]. Pelkowski, 990 F.2d at 743, citing Senate Report 95-989, supra note 62, at 63 (statement of Rep. Erlenborn); but see Jackson, supra note 26, at 1432 (young people can make perhaps the most persuasive claim to having their human capital stringently protected).

[FN259]. Pelkowski, 990 F.2d at 743; NYSHESC v. Kohn (In re Kohn), 5 Bankr. Ct. Dec. (CRR) 419, 422 (Bankr. S.D.N.Y. 1979) (citing H.R. Rep. No. 94- 1232, at 13-14 (1976) [hereinafter cited as House Report 94-1232]); Nunn v. Washington (In re Nunn), 788 F.2d 617, 619 (9th Cir. 1986).

[FN260]. See, e.g., Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 754 (S.D.N.Y. 1985) (it is the nature of § 523(a)(8)(B) applications that they are made by individuals who have only recently ended their educations); Revision Hearings, supra note 226, at 1099 (statement of Rep. Eshleman) (in practically all cases, borrowers are young, healthy, have few obligations beyond the student loan, and have a lifetime of earning ability ahead of them); but see Statistical Abstract, supra note 184, at 180, table 280 (1996) (from 1983 to 1993, students 35 years old and over rose from 13.7% to 19.4% of all students).

[FN261]. PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 543 (Bankr. E.D. Pa. 1979), quoting Revision Hearings, supra note 226, at 1095 (comments of counsel to American Council on Education).

[FN262]. The legislators who extended the period to seven years may have intended to encourage judicial discretion in this regard. A debtor who has been out of school for five or six years, and who in the 1980s would have thus qualified for an automatic discharge under subsection (A), might reasonably ask a court to consider his/her long-term prospects. See supra note 45 and accompanying text (regarding background of change to 7 years).

[FN263]. See, e.g., Elmira College v. Savercool (In re Savercool), 51 B.R. 180, 182 (Bankr. W.D.N.Y. 1985) (the greater the time span between leaving school and filing the petition, the weaker the policy interest in making loans nondischargeable); Love v. Department of Health, Educ. & Welfare (In re Love), 28 B.R. 475, 478-79 (Bankr. S.D. Inc. 1983) (four years elapsed since graduation); cf. PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 542 (Bankr. E.D. Pa. 1979) (citing House Report 94-1232, supra note 259, at 13-14 and House Report 95-595, supra note 16, at 133) (debtor quit school three years earlier; purpose of undue hardship exemption was to combat abuse by recent graduates); but see infra text accompanying note 495 (postponing undue hardship decision until a future date that would be 7.5 years after graduation).

[FN264]. See, e.g., Conner v. Illinois State Scholarship Comm’n (In re Conner), 89 B.R. 744, 750 (Bankr. N.D. Ill. 1988) (discharging student loan comprising 55% of total debt); Johnson v. USA Funds, Inc. (In re Johnson), 121 B.R. 91, 92 (Bankr. N.D. Okla. 1990) (discharged at 52%); Love v. Department of Health, Educ. & Welfare (In re Love), 28 B.R. 475, 479 (Bankr. S.D. Ind. 1983) (discharged at 47.5%); PHEAA v. Johnson, 5 Bankr. Ct. Dec. (CRR) 532, 544 (Bankr. E.D. Pa. 1979) (discharged at less than 30%); Wegfehrt v. Ohio Student Loan Comm’n (In re Wegfehrt), 10 B.R. 826, 830 (Bankr. N.D. Ohio 1981) (discharged at 1%); but see, e.g., Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 757 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987) (discharge denied at 80%); North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 241, 243 n.9 (Bankr. D. Minn. 1986) (discharge denied, noting that student loans comprised a high percentage of debt). Regarding concerns about making this calculation without paying greater attention to the circumstances surrounding the non-student-loan debt, see Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 915 n.2 (Bankr. E.D. Pa. 1987) and Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1014 (Bankr. N.D. Ind. 1987). One might suggest that the purpose of filing bankruptcy is to get free of debt from whatever source and that the percentage of student loan debt is potentially informative only when other factors indicate abuse. See also infra note 464 and accompanying text (regarding Brunner).

[FN265]. See infra note 266.

[FN266]. See, e.g., Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 923 (Bankr. E.D. Pa. 1987) (discharging law school graduate who repeatedly failed bar exam); Carter v. Kent State Univ. (In re Carter), 29 B.R. 228, 231 (Bankr. N.D. Ohio 1983) (discharge granted; student urged to obtain master’s degree in political science was poorly advised, given realities of job market); Clay v. Westmar College (In re Clay), 12 B.R. 251, 255 (Bankr. N.D. Iowa 1981) (discharge granted to debtor who acquired no marketable skills in college and whose current employment did not require his college education); Connolly v. Florida Board of Regents (In re Connolly), 29 B.R. 978, 982 (Bankr. M.D. Fla. 1983) (discharging debtor who had remote likelihood of deriving significant benefit from education); Correll v. Union Nat’l Bank of Pittsburgh (In re Correll), 105 B.R. 302, 305-307 (Bankr. W.D. Pa. 1989) (criticizing schools that lead students into significant debt without corresponding career guidance; discharge granted to student who lacked basic ability or had poor prerequisite training and did not benefit financially from education); Evans v. HEAF (In re Evans), 131 B.R. 372, 376 (Bankr. S.D. Ohio 1991) (discharge granted to debtor who found herself attempting to survive under the same standard of living as before the education); In re Fonzo, 1 B.R. 722, 724 (Bankr. S.D.N.Y. 1979) (discharge granted; college courses did not enhance debtor’s present position or foreseeable earning capacity); Law v. TERI (In re Law), 159 B.R. 287, 293 (Bankr. S.D. 1993) (college failed to monitor quality of education; discharge granted); Littell v. Oregon (In re Littell), 6 B.R. 85, 88 (Bankr. D. Or. 1980) (court should consider whether it was economically sound to encourage debtor to take out loans; partial discharge granted; see infra note 352); Powelson v. Stewart Sch. of Hairstyling, Inc. (In re Powelson), 25 B.R. 274, 276 (Bankr. D. Neb. 1982) (discharge granted; education did not turn out to be a good investment); Robinson v. United States Dep’t of Educ. (In re Robinson), 193 B.R. 967, 968 (Bankr. N.D. Ala. 1996) (equities are stronger if education is worthless than if debtor is presently employed in the exact position for which he trained); Silliman v. Nebraska Higher Educ. Loan Program (In re Silliman), 144 B.R. 748, 752 (Bankr. N.D. Ohio 1992) (discharging all of husband’s and half of wife’s student loans incurred to attend truck-driving school); United Student Aid Funds, Inc. v. Pena (In re Pena), 207 B.R. 919, 922-23 (9th Cir. BAP 1997) (discharged, based in part on finding that education was “meaningless”); Yarber v. Department of Health, Educ. & Welfare (In re Yarber), 19 B.R. 18, 21 (Bankr. S.D. Ohio 1982) (discharge granted; purpose of statute was to prevent bad faith, not give aggressive college an unimpeachable preference when education provides no benefit); Zobel v. Iowa College Aid Comm’n (In re Zobel), 80 B.R. 950, 952 (Bankr. N.D. Iowa 1986) (discharge granted to debtor whose education imparted a skill, but whose post-graduation employment was sporadic). See also Robinson, 193 B.R. at 970-71 (discharge may be consistent with congressional purpose even if debtor is receiving some benefit from the education); supra note 235 (borrower’s failure to make progress in school); infra note 287 (education may be oversold).

[FN267]. Brunner v. NYSHESC (In re Brunner), 46 B.R. 752 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987).

[FN268]. See infra notes 433-519 (discussing other aspects of Brunner and its followers).

[FN269]. Brunner, 46 B.R. at 756; see also In re Roberson, 999 F.2d 1132, 1137 (7th Cir. 1993) (finding government is not twisting the arms of students to force them to borrow).

[FN270]. Brunner, 46 B.R. at 755 n.3.

[FN271]. Id.

[FN272]. Id. at 757.

[FN273]. See supra notes 202-08 and accompanying text (Senate Report on lender malfeasance).

[FN274]. The exception to discharge is premised upon the assumption that the typical college graduate is young, with a lifetime of earning opportunity ahead. See supra note 259. Infancy, not necessarily a defense in a collection action on a student loan, should be poignant in the context of bankruptcy. See supra note 228.

[FN275]. See, e.g., Williams v. Illinois State Scholarship Comm’n, 563 N.E.2d 465, 487 (Ill. 1990) (federal guaranteed student loan agreements amount to adhesion contracts, in that the class members are in a disparate bargaining position, and are offered the loan on a take-it-or-leave-it basis; significance of contractual clause in such boilerplate agreement is greatly reduced because of the inequality in the parties’ bargaining power); McLeod v. Diversified Collection Servs. (In re McLeod), 176 B.R. 455, 458 (Bankr. N.D. Ohio 1994), aff’d, 100 F.3d 957 (6th Cir. 1996) (in Ohio, stipulations in promissory notes providing for payment of attorneys’ fees due to failure to pay loan balance at maturity are void); Riggs v. National Bank of Washington, D.C. v. Perry (In re Perry), 729 F.2d 982, 985 (4th Cir. 1984) (clauses stipulating that a purchaser is in default upon filing bankruptcy are unenforceable as a matter of law); cf. Veal v. First American Savings Bank, 914 F.2d 909, 911 n.2, 914-15 n.7 (7th Cir. 1990) (students receiving loans guaranteed by private and state agencies cannot rely on regulations pertaining to federal loan programs but may benefit from guaranty agency compromise and write-off procedures, are entitled to credit for amounts not yet paid by lender to defunct school, and can assert contract defenses under state law if sued on the loans); but see Williams v. National School of Health Technology, Inc., 836 F.Supp. 273 (E.D. Pa. 1993), aff’d, 37 F.3d 1491 (3d Cir. 1994) (state consumer protection law does not protect against fraudulence in student loan transaction).

[FN276]. Loan origination and insurance fees paid by students probably exceed the cost of bankruptcies. See supra notes 217-20 and accompanying text. The debtor who is freed by the bankruptcy discharge to concentrate upon the future is likely to be a future payer of taxes and, generally, a contributor to society rather than a problem for it. See supra note 26 and accompanying text. By contrast, the national wealth is diminished, to the taxpayer’s detriment, if, in exchange for having fewer student loan bankruptcies, fewer of our students most con-cerned with failure decide to take student loans and obtain the correlative education. See infra page 463. Taxpayers incur a far greater penalty for improper attention to the causes of student loan bankruptcy when they, the taxpayers, must support adult children whose educations have not paid off, see, e.g., infra note 402, or are themselves co-signers on the disputed loans, see, e.g., In re Pelkowski, 990 F.2d 737, 744 (3d Cir. 1993), and, as such, may be liable well into their retirement years, see infra note 348 and accompanying text. Also, the taxpayer is not implicated when the educational loan comes from the funds of a private school. Erik Larson, Why Colleges Cost Too Much, Time, Mar. 17, 1997, at 49 (noting some wealthy colleges’ endowments have grown into the billions of dollars). In any event, the cost reaches the taxpayer when the federal government reimburses the holder of the promissory note, which will occur no later than the time when a party files a complaint to determine dischargeability. See supra note 207. Since that takes place long before the litigation of that complaint, the only party benefiting from post- bankruptcy loan repayment may be the creditor, which may have been deliberately responsible for the default in the first place. See supra notes 202-06 and accompanying text.

[FN277]. The current generation is not the first to receive federal educational assistance at some cost to the taxpayer. See Zackerman, supra note 10, at 697-98 (ROTC, established in 1917, was first direct federal educational aid program, followed by inter alia National Youth Administration in 1930s); Ryman, supra note 41, at 217-18 (previous generations had G.I. Bill and other free subsidies). Cf. supra note 213 (high tuition inflation in recent years).

[FN278]. See infra note 488 (the view in the House in 1977, never specifically recanted, was that there was no significant student loan bankruptcy problem but that, if there were, then the student loan programs should be viewed, not as a commercial enterprise, but as “general social legislation that has an associated cost”).

[FN279]. See, e.g., North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 241 (Bankr. D. Minn. 1986) (debtor was irked by the manner in which creditor’s officers had treated him); Silliman v. Neb. Higher Educ. Loan Program (In re Silliman), 144 B.R. 748, 752 (Bankr. N.D. Ohio 1992) (punishing institutions for forcing loans upon students which are not in their best interest); infra note 360.

[FN280]. See supra notes 202-08 and accompanying text (malfeasance by loan- related institutions).

[FN281]. See Evelyn Brody, Paying Back Your Country Through Income- Contingent Student Loans, 31 San Diego L. Rev. 449, 457 (1994) (arguing that society should subsidize the cost of education in those cases where the public would benefit from the student’s pursuit of education but the market fails to compensate adequately).

[FN282]. See Walcott v. USA Funds, Inc. (In re Walcott), 185 B.R. 721, 724-25 (Bankr. E.D.N.C. 1995) (noting bleak job outlook facing many recent graduates, but denying discharge despite substantial effort by debtor during the four years since graduation to find employment that would enable loan repayment).

[FN283]. In its initial counseling to the debtor, the school is now required to emphasize that the borrower must repay the loan even if the borrower does not complete the program, is unable to obtain employment upon graduation, or is otherwise dissatisfied with or does not receive the educational or other services that the borrower purchased from the school. 34 C.F.R. § 682.604(f)(2)(iii) (1996). Of course, the warning begs the question raised in the special context of bankruptcy, and does not overrule § 523(a)(8).

[FN284]. See supra note 55 and accompanying text.

[FN285]. See infra notes 462, 472, 539 & 550 (decisions requiring debtors to take jobs outside their field in order to pay for educations that had failed to produce careers and had led to bankruptcy).

[FN286]. These comments do not dispute that an allegedly “impractical” education in e.g., liberal arts may prove highly practical in the long term. On the contrary, there exists a market even in “impractical” areas of education, and the student of such an area deserves reasonable attention to the question of how s/he might persuade that market to pay him/her for a lifetime of work therein.

[FN287]. See Kraft v. NYSHESC (In re Kraft), 161 B.R. 82, 85 nn.1 & 3 (Bankr. W.D.N.Y. 1993) (curriculum may be misrepresented or oversold by a for- profit school, which may also advise debtor to include living expenses, e.g., car payments, in the calculation of the total amount of student loan needed); Morrison, supra note 213 and accompanying text (tuition inflation); note 235 and accompanying text (requiring debtor to make progress in his/her course of study); and note 240 and accompanying text (educational marketing).

[FN288]. See supra note 227 and accompanying text.

[FN289]. Cf. GAO High-Risk Report, supra note 209, at 25 (lenders and guarantors with little at stake have contributed to the default problem; they would have had an incentive to monitor the quality of education if suitable risk-sharing arrangements had been in place).

[FN290]. Bankruptcy Commission Report, supra note 27, at 140 n.15.

[FN291]. See Salvin, supra note 26, at 146.

[FN292]. But see infra note 550 and accompanying text (requiring such debtors to pursue other careers and live in other places if necessary to repay the loans).

[FN293]. Salvin, supra note 26, at 184.

[FN294]. See infra text accompanying note 400 (regarding the “matter of policy” phrase). See also infra note 318 (regarding the Commission’s view of prudence) and notes 497-500 and accompanying text (regarding prudence generally).

[FN295]. Brunner, 46 B.R. at 754.

[FN296]. Compare supra note 124 with infra note 399.

[FN297]. The next paragraph in the Report states that the draft statute “excepts from dischargeability any ‘educational debt’ [if] at least one installment payment of the debt [was] payable for five years or longer.” Bankruptcy Commission Report, supra note 27, at 140 n.16. Of course, that payable payment would qualify the loan for discharge, not except it. See supra note 165 (text of draft to which that citation refers).

[FN298]. See Ford v. NYSHESC (In re Ford), 22 B.R. 442, 445 (Bankr. W.D.N.Y. 1982).

[FN299]. See supra note 34 and accompanying text.

[FN300]. Cf. 42 U.S.C. § 12111(10) (1994) (undue hardship provision of Americans with Disabilities Act (“ADA”) defined at length); Steven B. Epstein, In Search of a Bright Line: Determining When an Employer’s Financial Hardship Becomes “Undue” Under the Americans with Disabilities Act, 48 Vand. L. Rev. 391, 402-03 (1995) (observing that regulations provide additional factors to determine undue hardship under the ADA, and list of factors in statute and regulation was not meant to be exclusive).

[FN301]. See supra note 253.

[FN302]. See supra notes 262-65 and accompanying text.

[FN303]. Bankruptcy Form B 200 requires a schedule of assets and liabilities on Official Form 6, including statements of current income and current expenditures on Schedules I and J thereto, respectively. But see infra note 359 (debtors experiencing difficulty in providing such information).

[FN304]. See infra notes 356-61 and accompanying text.

[FN305]. See, e.g., Alliger v. PHEAA (In re Alliger), 78 B.R. 96, 99 n.5 (Bankr. E.D. Pa. 1987) (PHEAA has the capacity, using tools of discovery, to present evidence regarding debtor’s medical condition); Ted D. Ayres & Diane R. Sagner, The Bankruptcy Reform Act and Student Loans: Unraveling New Knots, 9 J.C. & U.L. 361, 377 (1982-83) (attorney representing school can make relatively economical use of detailed interrogatories sent to the debtor; sample set of interrogatories provided); see generally 2 McCormick, Evidence § 337 (J. Strong 4th ed. 1992) (very often one must prove matters as to which the adversary has superior access to the proof).

[FN306]. See, e.g., infra note 373.

[FN307]. See infra note 391 (dictionary definitions).

[FN308]. Precision is not a hallmark of the methods by which many courts examine the debtor’s finances. See, e.g., infra notes 373, 411 & 490-92.

[FN309]. See supra notes 22 (statute should be construed strictly against the creditor), 23 (there is a presumption in favor of granting the discharge), 175 (the burden of persuasion is on the creditor), 178 (burden of production begins on creditor) & 306 (burden of production should stay on creditor wherever possible) and accompanying text.

[FN310]. This is the scenario for which the statute was evidently designed. See supra notes 256-58.

[FN311]. The excerpt is quoted in e.g., Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 915 (Bankr. E.D. Pa. 1987); NYSHESC v. Kohn (In re Kohn), 5 Bankr. Ct. Dec. (CRR) 419, 423 (Bankr. S.D.N.Y. 1979); PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 536 (Bankr. E.D. Pa. 1979).

[FN312]. See, e.g., Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 754- 55 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987) (based upon Johnson) and infra notes 433-38 and accompanying text (cases following Brunner).

[FN313]. Bankruptcy Commission Report, supra note 27, at 140-41 n.17.

[FN314]. Supra note 165.

[FN315]. Cf. e.g., infra notes 535-39 and accompanying text (using the optimistic assumption rather than the present facts regarding income).

[FN316]. See, e.g., Woodcock v. Chemical Bank, 149 B.R. 957, 962-63 (Bankr. D. Colo. 1993), aff’d, 45 F.3d 363 (10th Cir. 1995) (rejecting portions of debtor’s budget allocated for computer expense and CompuServe online subscription).

[FN317]. See PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 539 (Bankr. E.D. Pa. 1979) (finding no case under current or previous law, at that point, in which the court attacked the amount of a specific expense as being unreasonably high).

[FN318]. For examples of such judgments, see infra notes 397, 499, 548 & 550-51.

[FN319]. Fox v. PHEAA (In re Fox), 163 B.R. 975, 978 (Bankr. M.D. Pa. 1993) (undue hardship, in the Commission’s view, had to be tailored to the debtor’s actual situation). For example, a court-ordered reduction in the debtor’s video and beer budget may translate instead, possibly for understandable reasons, into lower quality in the fruit and protein budget, regardless of whether other strata of society would approve. See, e.g., Hawkins v. Buena Vista College (In re Hawkins), 187 B.R. 294, 299 (Bankr. N.D. Iowa 1995) (creditor contended that the money debtor spent on cigarettes should instead be applied to student loans).

[FN320]. See infra notes 345-47 and accompanying text.

[FN321]. See, e.g., infra notes 367-73 and accompanying text.

[FN322]. Supra note 165.

[FN323]. See supra note 62.

[FN324]. Cf. 11 U.S.C. § 523(a)(15)(A) (1994) (discharge explicitly conditioned upon debtor’s ability to pay).

[FN325]. See supra notes 185-97 and accompanying text.

[FN326]. See supra note 191 (regarding 10- and 30-year repayment periods).

[FN327]. See, e.g., Chisari v. Florida Dep’t of Educ. (In re Chisari), 183 B.R. 963, 965 (Bankr. M.D. Fla. 1995) (involving creditor who refused proffered payment of $20-25 per month and threatened to garnish debtor’s minimal wages); Goranson v. PHEAA (In re Goranson), 183 B.R. 52, 56 (Bankr. W.D.N.Y. 1995) (holding that creditor cannot raise the hurdle for discharge higher and higher by offering to take smaller and smaller payments).

[FN328]. See, e.g., infra notes 348 & 540 and accompanying text.

[FN329]. See PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 544 (Bankr. E.D. Pa. 1979) (finding that ability to repay is calculated with respect to “the longest foreseeable period of time allowed for repayment of the loan”) [emphasis added]; Hinkle v. Wheaton College (In re Hinkle), 200 B.R. 690, 693 n.2 (Bankr. W.D. Wash. 1996) (holding that if government wished to negotiate new payment schedules with debtors in bankruptcy, it could do so; failing that, court must evaluate undue hardship on basis of current schedule); accord, Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 925 (Bankr. E.D. Pa. 1987).

[FN330]. See supra note 192 (due diligence).

[FN331]. See supra note 231 and accompanying text (effects of failure to apply this presumption).

[FN332]. This shortening will increase the monthly payment necessary to repay the loan during the smaller number of months remaining in the repayment period. It is up to the creditor to insure that its pre-bankruptcy collection efforts are sufficiently energetic to bring out the debtor’s true ability to pay. (This article contests judicially created rules that go beyond what Congress intended; it does not protest earnest activity whose permissibility has been thoroughly considered with respect to the rights of the parties and the interests of the public.).

[FN333]. See supra notes 187-91 and accompanying text.

[FN334]. Federal law now grants an “economic hardship” deferment for certain low-income, full-time workers. 20 U.S.C. § 1077(a)(2)(C)(iii) (1994). “Full- time,” for this purpose, is defined as 30 or more hours per week. 34 C.F.R. § 682.211(s)(6)(x) (1996); see also 34 C.F.R. § 682.210(h)(4) (1996). The deferment calculation uses, as a baseline figure, the greater of (a) the federal minimum wage pursuant to 29 U.S.C. § 206 (1994) or (b) the federal poverty level for a family of two pursuant to 42 U.S.C. § 9902(2) (1994). See infra note 528 (poverty levels in recent years). An economic hardship exists if the borrower is working full-time and not earning more than the baseline. 20 U.S.C. § 1085(o)(1)(A) (1994). Also, an excessive federal educational debt burden yields an economic hardship for a full-time worker if (a) the total of such debt is at least 20% of the borrower’s adjusted gross income and (b) adjusted gross income minus such debt is not equal to at least 220% of the baseline. 20 U.S.C. § 1085(o)(1)(B). See supra note 188 & infra note 396 (forbearances).

[FN335]. See supra note 245, infra notes 451-57 and accompanying text; cf. 20 U.S.C. § 1091a(a) (1994) (no statute of limitations on student loan debt collection).

[FN336]. See, e.g., supra note 188 (creditor in Robinson denied or ignored request for forbearance).

[FN337]. See, e.g., Hoyle v. PHEAA (In re Hoyle), 199 B.R. 518, 522 n.3 (Bankr. E.D. Pa. 1996) (if debtor had not been in default, she would have qualified for a forbearance).

[FN338]. See supra text accompanying note 197 (confusion that results when creditor fails to supply such information to court).

[FN339]. Carter v. Kent State Univ. (In re Carter), 29 B.R. 228, 232 (Bankr. N.D. Ohio 1983) (assuming garnishment would follow denial of discharge); Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1014-15 (Bankr. N.D. Ind. 1987) (proceeding on assumption that creditor will garnish debtor’s income and that payment obligation will be the maximum amount garnishable under state law absent commitment to the contrary).

[FN340]. See supra text accompanying note 313.

[FN341]. See supra note 26 and accompanying text.

[FN342]. See, e.g., Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 925 (Bankr. E.D. Pa. 1987) (discharge should be based on the debtor’s history rather than speculation about the future); Ford v. NYSHESC (In re Ford), 22 B.R. 442, 446 (Bankr. W.D.N.Y. 1982) (noting irregular support payments from ex-husband and uncertain employment prospects); Correll v. Union Nat’l Bank of Pittsburgh (In re Correll), 105 B.R. 302, 307 (Bankr. W.D. Pa. 1989) (taking account of repeated layoffs); Love v. Dep’t of Health, Educ. & Welfare (In re Love), 28 B.R. 475, 478 (Bankr. S.D. Ind. 1983) (same); United Student Aid Funds, Inc. v. Pena (In re Pena), 207 B.R. 919, 922 (B.A.P. 9th Cir. 1997) (using average income figure, rather than the high figure suggested by creditor, not clearly erroneous); Vaughn v. Illinois State Scholarship Comm’n, 151 B.R. 481, 485 (C.D. Ill. 1993) (finding speculation about future earnings from a mythical job inappropriate). See infra notes 535-39 and accompanying text (examples of such speculation).

[FN343]. See Lines v. Frederick, 400 U.S. 18, 20, 91 S. Ct. 113, 114 (1970) (debtor’s postpetition vacation pay is a legitimate part of the fresh start); Johnson v. USA Funds, Inc. (In re Johnson), 121 B.R. 91, 94 (Bankr. N.D. Okla. 1990) (recreation expense is important part of debtor’s fresh start); Hoyle v. PHEAA (In re Hoyle), 199 B.R. 518, 522 (Bankr. E.D. Pa. 1996) (absence of allowance for recreation or everyday living noted in granting discharge); In re Fonzo, 1 B.R. 722, 723 (Bankr. S.D.N.Y. 1979) (same); North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 239, 242 n.7 (Bankr. D. Minn. 1986) (finding entertainment expense of $50/month reasonable); infra note 397 (hours of work per week expected).

[FN344]. See, e.g., Raimondo v. NYSHESC (In re Raimondo), 183 B.R. 677, 681 (Bankr. W.D.N.Y. 1995) (holding that judges must review the reasonableness of a debtor’s budget but are ill-equipped to review personal decisions). Note the likelihood that, the more the court’s analysis depends upon trivial line- by-line adjustments in a debtor’s fluctuating current expenses, the more it risks long-term irrelevance. Cf. e.g., supra note 319; infra notes 502 & 529-31 and accompanying text.

[FN345]. PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 538-39 (Bankr. E.D. Pa. 1979) (citing Ahart, supra note 31, at 206-07 (allowable expenses for particular debtor should be determined by comparison with similarly situated hypothetical debtor; courts had not yet adopted a government geographical index of regional base living costs); Wegfehrt v. Ohio Student Loan Comm’n (In re Wegfehrt), 10 B.R. 826, 831 n.9 (Bankr. N.D. Ohio 1981) (holding that court may take judicial notice of Dep’t of Labor, Bureau of Statistics data on household expenses).

[FN346]. See Salvin, supra note 26, at 170, 186-89 (criticizing the use of federal poverty guidelines in this context and suggesting alternatives, including HUD calculations, relationship of debtor’s income to national median family and per capita income levels, Bureau of Labor Statistics calculations, Legal Service Corporation assistance cutoffs, qualification for federal tax assistance via Earned Income Tax Credits, Department of Education low-income calculations, and Aid to Families with Dependent Children levels) (generally suggesting hardship for families with incomes up into the mid-$20,000 range). Other alternatives might include the levels of income at which students qualify for various amounts of financial aid and the “break” for lower incomes in federal income tax gradations. See also Hinkle v. Wheaton College (In re Hinkle), 200 B.R. 690, 693 (Bankr. W.D. Wash. 1996) (debtor suggested using guidelines for IRS Balance Due Account Procedures); Correll v. Union Nat’l Bank of Pittsburgh (In re Correll), 105 B.R. 302, 305 (Bankr. W.D. Pa. 1989) (using HUD guideline); infra notes 419 & 528.

[FN347]. Compare infra note 529 and Statistical Abstract, supra note 184, tables 705 & 706 (1996). The latter provides item-by-item and total expenditures for average households. Selected examples: bysize of household, total expenditures average $19,345 (one person), $33,088 (two), $36,750 (three), and $41,514 (four); by region (lumping together all sizes of household), total expenditures range from $30,086 (South) to $35,368 (West); by type of household, totals average $21,861 (single person), $21,671 (single parent plus at least one child under 18), $36,198 (husband and wife only), $38,560 (husband, wife, and oldest child under 6), $44,145 (same, but oldest child 6 to 17), and $48,489 (same, but oldest child 18 or over).

[FN348]. See Conner v. Illinois State Scholarship Comm’n (In re Conner), 89 B.R. 744, 750 (Bankr. N.D. Ill. 1988) (imposing a 20-year repayment period, starting in four years) and Salvin, supra note 26, at 143 (debtor in Conner will be 75 when she finishes that 20-year period; court did not consider her retirement savings, nor inquire whether any present dependents would experience undue hardship in the future by having to support her in retirement); Fox v. PHEAA (In re Fox), 163 B.R. 975, 982 (Bankr. M.D. Pa. 1993) (ten-year repayment would continue until debtor was approaching retirement); infra note 398 (regarding dependents); see generally Note, Melissa A. Hall, Non-Student Co- Signers and Section 523(a)(8) of the Bankruptcy Code, 1991 U. Chi. Legal Forum 357, 366-68 (1991).

[FN349]. Compare e.g., Clay v. Westmar College (In re Clay), 12 B.R. 251, 254 (Bankr. N.D. Iowa 1981) (taking into account the debtor’s moral obligation to repay a family member) with Woodcock v. Chemical Bank (In re Woodcock), 149 B.R. 957, 962 (Bankr. D. Colo. 1993), aff’d, No. 93-M-705 (D. Colo. Feb. 17, 1994), aff’d 45 F.3d 363 (10th Cir. 1995) (similar family obligation rejected); compare PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532, 538 (Bankr. E.D. Pa. 1979) and Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1014 (Bankr. N.D. Ind. 1987) and In re Fonzo, 1 B.R. 722, 723 (Bankr. S.D.N.Y. 1979) and TERI v. Lekowicz (In re Lekowicz), 119 B.R. 237, 238 (D. Colo. 1990) (nondischarged debts should be considered in determining debtor’s degree of hardship) with Woodcock, 149 B.R. at 963 (disallowing budgetary allocation for student loans for which discharge was not sought) and North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 241 (Bankr. D. Minn. 1986) (holding that debtor is not allowed to seek to discharge only part of debts; payments on debts not sought to be discharged are not considered in hardship calculation).

[FN350]. See, e.g., Love v. Dep’t of Health, Educ. & Welfare (In re Love), 28 B.R. 475, 479 (Bankr. S.D. Inc. 1983) (involuntarily ascetic existence made possible at present only by having a roommate); Johnson v. USA Funds, Inc. (In re Johnson), 121 B.R. 91, 94 (Bankr. N.D. Okla. 1990) (allocation for emergencies is important); see also infra note 359. In some cases, the debtor’s hardship may seem more or less obvious in light of the availability of, and the debtor’s qualification or nonqualification for, loan forgiveness programs. See, e.g., 34 C.F.R. § § 674.53 & 674.54 (1997) (regarding cancellation of Perkins loans for teaching in certain schools or subjects or for teaching certain students); United States v. Kephart, 170 B.R. 787 (W.D.N.Y. 1994) (medical school graduate debtor has the means to reduce her debt pursuant to statute by practicing medicine in targeted locations); David H. Vernon, Educational Debt Burden: Law School Assistance Programs-A Review of Existing Programs and a Proposed New Approach, 39 J. Legal Educ. 743 (1989) (some law schools provide debt reduction programs for some of their graduates).

[FN351]. See supra text accompanying notes 290 & 313.

[FN352]. See, e.g., Albert v. Ohio Student Loan Comm’n (In re Albert), 25 B.R. 98, 103 (Bankr. N.D. Ohio 1982) (discharging interest while holding principal nondischargeable); Ballard v. Virginia ex rel. State Educ. Assistance Auth. (In re Ballard), 60 B.R. 673, 675 (Bankr. W.D. Va. 1986) (same); Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1012 (Bankr. N.D. Ind. 1987) (court can fashion equitable solution when appropriate); Hagen v. Avangel College, Inc. (In re Hagen), 36 B.R. 578, 579 (Bankr. M.D. Fla. 1983) (discharging one-half of $10,000 loan and granting five-year deferment before requiring full payment of other half); Littell v. Oregon (In re Littell), 6 B.R. 85, 89 (Bankr. D. Or. 1980) (requiring total payments of $810 on $7,000 debt); Love v. United States (In re Love), 33 B.R. 753, 755 (Bankr. E.D. Va. 1983) (discharging interest while holding principal nondischargeable and granting three-year deferment on principal payments); In re MacPherson, 4 Bankr. Ct. Dec. (CRR) 950, 951 (Bankr. W.D. Wis. 1978) (revising the debt; decided under predecessor statute); Mayes v. Oklahoma State Regents for Higher Educ. (In re Mayes), 183 B.R. 261, 264 (Bankr. E.D. Okla. 1995) (interest and attorneys’ fees discharged, but not principal); United States v. Brown (In re Brown), 18 B.R. 219, 224 (Bankr. D. Kan. 1982) (discharging $3,569 while holding $7,000 nondischargeable); United States v. Hemmen (In re Hemmen), 7 B.R. 63, 67 (Bankr. N.D. Ala. 1980) (finding full debt dischargeable if debtor used best efforts to find employment and paid all income over $3,600 to government for five-year period). Query whether the court could grant discharge, effective upon the last day of the loan repayment period, for all or a portion of the debt, allowing the creditor to resume collection efforts until then. See also Heckathorn v. United States ex rel. United States Dep’t of Educ. (In re Heckathorn), 199 B.R. 188, 194-95 (Bankr. N.D. Okla. 1996) (restructuring is a necessary result from fact that financial hardship is a matter of degree, not all-or-nothing, and avoids unnecessarily sacrificing either fresh start policy or student loan repayment policy); Salvin, supra note 26, at 194 n.332; supra note 167. See generally Note, Thad Collins, Forging Middle Ground: Revision of Student Loan Debts in Bankruptcy as an Impetus to Amend 11 U.S.C. § 523(a)(8), 75 Iowa L. Rev. 733 (1990).

[FN353]. See supra text accompanying note 22.

[FN354]. See, e.g., Rice v. United States (In re Rice), 78 F.3d 1144, 1151 (6th Cir. 1996) (bankruptcy court is not authorized to reduce a nondischargeable loan merely because of perceived unfairness to the debtor’s dependents); Hawkins v. Buena Vista College (In re Hawkins), 187 B.R. 294, 301 (Bankr. N.D. Iowa 1995) (Congress used “to the extent” phrasing elsewhere in § 523(a) and could have used it in § 523(a)(8) if it had intended to allow restructuring); see also Nunn v. Washington (In re Nunn), 788 F.2d 617, 619 (9th Cir. 1986) (the view that § 523(a)(8)(A) discharges only those installments due before the beginning of the five-(or seven-) year period may serve other objectives, but fails to establish fixed time when bankruptcy may be conclusively presumed to be caused by factors other than desire to avoid repayment); compare Raimondo v. NYSHESC (In re Raimondo), 183 B.R. 677, 680- 81 (Bankr. W.D.N.Y. 1995) (impossible to award higher priority to any one loan; court may thus discharge pro rata from all loans the amount exceeding what debtor can pay without undue hardship) with Hinkle v. Wheaton College (In re Hinkle), 200 B.R. 690, 693 (Bankr. W.D. Wash. 1996) (restructuring loan impermissible, but if not consolidated, court may consider dischargeability of each loan separately, in the order they were made) and Wardlow v. Great Lakes Higher Educ. Corp. (In re Wardlow), 167 B.R. 148, 152-53 (Bankr. W.D. Mo. 1993) (criticizing restructuring for impermissibly transforming Chapter 7 case into Chapter 13 case without Chapter 13 safeguards). See also infra notes 540- 43 and accompanying text.

[FN355]. See, e.g., Robinson v. United States Dep’t of Educ. (In re Robinson), 193 B.R. 967, 969 n.3, 971 (Bankr. N.D. Ala. 1996) (holding that debtor’s failure to provide evidence of amount of loan or of required monthly payments prevented court from finding undue hardship); Sands v. United Student Aid Funds, Inc. (In re Sands), 166 B.R. 299, 311 (Bankr. W.D. Mich. 1994) (despite six surgeries on both eyes and both feet in the past year, pro se debtor’s inadmissible hearsay evidence as to medical condition did not establish continuing disability); compare Keyes v. School District No. 1, 413 U.S. 189, 209, 93 S. Ct. 2686, 2698 (1973) (holding that burdens are allocated, not by hard-and-fast standards, but on the basis of policy and fairness in the particular situation) with supra note 275 and accompanying text (imbalanced burden imposed by Brunner).

[FN356]. See, e.g., Andrews v. South Dakota Student Assistance Corp. (In re Andrews), 661 F.2d 702, 705 n.5 (8th Cir. 1981) (pro bono); Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 753 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987) (debtor’s counsel deserted her on appeal; no brief filed); Craig v. PHEAA (In re Craig), 64 B.R. 854, 855 (Bankr. W.D. Pa. 1986) (represented by Legal Aid at trial), appeal dismissed, 64 B.R. 857 (W.D. Pa. 1986) (pro se appeal untimely); PHEAA v. Faish (In re Faish), 72 F.3d 298, 299 (3d Cir. 1995), cert. denied, 116 S. Ct. 2532 (1996); In re Roberson, 999 F.2d 1132, 1133 (7th Cir. 1993) (represented by legal services plan of employer who had fired him); see also supra note 274 and accompanying text (student loan signatory is generally young and not represented by counsel at time of executing loan agreement); Code Review Project, supra note 46, at 159 (recommending restoring Chapter 13 discharge because bankrupt student loan debtors, consisting mostly of low-income graduates of poor-quality trade schools, cannot afford an attorney to litigate the unpredictable undue hardship issue under Chapter 7).

[FN357]. Debtors may note that some attorneys have assisted poor debtors pro bono (i.e., without charge). Also, although the actual legal work may have to be provided pro se (by the debtor him/herself), debtors may be able to obtain a free consultation from a local attorney, and can obtain some up-to-date information with Internet access (which may be available e.g., through the local public library). See, e.g., U.S. Bankruptcy Court for the District of New Mexico (last modified Oct. 21, 1996) <http:// http://www.nmcourt.fed.us/bkdocs/bkinfo.htm> (introduction to federal bankruptcy procedure); FindLaw (last visited Feb. 21, 1998) <http://www.lawcrawler.com> (legal searches online); Pine Tree Legal Assistance (last modified Nov. 1996) < http://www.ptla.org/student.htm> (“Information You Should Know If You Are Behind in Your Federal Student Loan Payments”); Law Offices of Warren E. Agin (last visited Feb. 21, 1998) <http://www.agin.com> (providing links to bankruptcy law locations on the Internet); Mory Brenner, Esq. (last modified Nov. 7, 1997) <http://www.debtworkout.com/debtlink.html> (“Debtor Links”).

[FN358]. Cf. Woodcock v. Chemical Bank (In re Woodcock), 149 B.R. 957, 963 (Bankr. D. Colo. 1993) aff’d, 45 F.3d 363 (10th Cir. 1995) (finding debtor’s budget excessive; rejecting $25/month allowance for future legal expenses as speculative). See supra note 75 and accompanying text.

[FN359]. See, e.g., Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 757 (Bankr. S.D.N.Y. 1985) (no specific testimony about expenses other than rent); Hornsby v. TSAC (In re Hornsby), 201 B.R. 195, 198 (Bankr. W.D. Tenn. 1995) (debtor failed to allow for unexpected expenses such as car repairs); Johnson v. USA Funds, Inc. (In re Johnson), 121 B.R. 91, 94 (Bankr. N.D. Okla. 1990) (debtor failed to budget for recreation or emergencies); Malloy v. United States (In re Malloy), 144 B.R. 38, 39-40 (Bankr. E.D. Va. 1992), rev’d on other grounds, 155 B.R. 940 (E.D. Va. 1993), aff’d, 23 F.3d 402 (4th Cir. 1994) (no allowance for clothing, car expense, or health insurance); Washington v. Virginia State Educ. Assistance Auth. (In re Washington), 41 B.R. 211, 215 (Bankr. E.D. Va. 1984) (debtors’ budget did not include expenses for clothing, health care, insurance, or rent); Windland v. United States Dep’t of Educ. (In re Windland), 201 B.R. 178, 182 (N.D. Ohio 1996) (debtor’s budget failed to allow for lost income during days of sick leave to take care of ill daughter, asthma medication, or car repairs); supra note 197 and accompanying text (debtors failing to produce evidence at trial). Cf. Stone v. Stone (In re Stone), 199 B.R. 753, 779 (Bankr. N.D. Ala. 1996) (in cases under subsection (a)(15), it is not universally true that debtor is in a better position to prove relevant facts); supra note 347 (Statistical Abstract contains a checklist of expense items).

[FN360]. See, e.g., infra notes 538, 551; but see Andr v. Pace Univ., 618 N.Y.S.2d 975, 981 (City Ct. 1994) (Judge Thomas A. Dickerson, of Yonkers, N.Y. city court, held university guilty of educational malpractice) and Christopher Shea, Two Students at Pace U. Win Refund and Damages Over Computer Course They Say Was Too Hard, 40 Chronicle of Higher Educ. at A28 (No. 46, July 20, 1994) (Judge Dickerson himself had been sued by Cornell University in 1979 for defaulting on student loans and countersued on grounds that his education had little or no value). See also Granfinanciera v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782 (1989) (regarding right to jury trial in bankruptcy).

[FN361]. See, e.g., Daugherty v. First Tenn. Bank (In re Daugherty), 175 B.R. 953, 960 (Bankr. E.D. Tenn. 1994) (awarding creditor $6,540 for collection charges just to the point of trial).

[FN362]. See Zackerman, supra note 10, at 701-21 passim (the Johnson, Bryant, Brunner, and case-by-case approaches discussed in the following pages are the primary approaches that courts have taken to the determination of undue hardship); accord PHEAA v. Faish (In re Faish), 72 F.3d 298, 303 (3d Cir. 1995), cert. denied, 116 S. Ct. 2532 (1996) (failing to mention the case-by- case alternative).

[FN363]. Coleman v. HEAF (In re Coleman), 98 B.R. 443, 449 (Bankr. S.D. Ind. 1989). Compare e.g., infra note 526 with e.g., infra text accompanying note 368.

[FN364]. Grogan v. Garner, 498 U.S. 279, 286, 111 S. Ct. 654, 659 (1991).

[FN365]. See supra text accompanying notes 100 (burden of persuasion) and 116 (burden of production).

[FN366]. Compare, e.g., infra text accompanying note 368 (stringent test designed in 1979) with, e.g., Wegfehrt v. Ohio Student Loan Comm’n (In re Wegfehrt), 10 B.R. 826, 831 (Bankr. N.D. Ohio 1981) (holding that statute was intended to prevent discharge only in cases of intentional abuse of bankruptcy laws).

[FN367]. NYSHESC v. Kohn (In re Kohn), 5 Bankr. Ct. Dec. (CRR) 419 (Bankr. S.D.N.Y. 1979).

[FN368]. Id. at 424. This interpretation was based upon the income- specific predecessor to the present § 523(a)(8). Id. (“[T]he court is satisfied that the undue hardship contemplated by 20 U.S.C. § 1087-3 is an economic one. . . .”); but see supra text accompanying note 324.

[FN369]. Kohn, 5 Bankr. Ct. Dec. (CRR) at 423; see Georgia Higher Ed. Assistance Corp. v. Bell (In re Bell), 5 B.R. 461, 462 (Bankr. N.D. Ga. 1980) (noting that the legislative history is of little assistance in determining the underlying rationale of the exception to discharge). See infra notes 446-47 (noting similar difficulties).

[FN370]. Id. at 426 n.35.

[FN371]. Id. at 423.

[FN372]. Id. at 424.

[FN373]. While this court cannot shirk the responsibility cast on it by Congress to determine on a case by case basis whether one student borrower will be relieved and another not, the court finds the exercise demeaning in the last degree to itself and to the bankrupt. Of what insight is this or any court possessed to determine how an individual is to fashion his life style, or how much effort he should or can expend to repay his loan.

Id. at 426 n.40. Cf. North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 243-44 (Bankr. D. Minn. 1986) (denying discharge because debtor was experiencing unjust hardship rather than undue hardship; for policy reasons that should be addressed to legislature, outcome was admittedly “draconian”).

[FN374]. Briscoe v. Bank of N.Y. (In re Briscoe), 16 B.R. 128, 131 (Bankr. S.D.N.Y. 1981).

[FN375]. See, e.g., Bryant v. PHEAA (In re Bryant), 72 B.R. 913, 917 (Bankr. E.D. Pa. 1987); N.D. State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 243 (Bankr. D. Minn. 1986); citations collected in Salvin, supra note 26, at 150-51 n.69; infra note 506 and accompanying text.

[FN376]. Craig v. PHEAA (In re Craig), 64 B.R. 854, 856-57 (Bankr. W.D. Pa. 1986), appeal dismissed, 64 B.R. 857 (W.D. Pa. 1986).

[FN377]. Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 756 (S.D.N.Y. 1985); see supra note 373.

[FN378]. Id.

[FN379]. See infra notes 441-519 and accompanying text.

[FN380]. Brunner v. NYSHESC, 831 F.2d 395, 396 (2d Cir. 1987).

[FN381]. Brunner, 46 B.R. at 755, aff’d, 831 F.2d at 396 (2d Cir. 1987).

[FN382]. Brunner, 46 B.R. at 756.

[FN383]. Id. at 754, aff’d, 831 F.2d at 396.

[FN384]. See, e.g., Brunner, 831 F.2d at 396 (holding that debtor is required to show a “likelihood”); Healey v. Mass. Higher Educ. (In re Healey), 161 B.R. 389, 395-96 (E.D. Mich. 1993) (holding that debtor must show, by preponderance of evidence, that the requisite hardship is likely to persist).

[FN385]. Brunner, 831 F.2d at 396.

[FN386]. In re Roberson, 999 F.2d 1132, 1136 (7th Cir. 1993) (applying Brunner, quoting Briscoe, 16 B.R. at 131); see Healey, 161 B.R. at 396 (overruling bankruptcy court’s reliance on debtor’s uncontroverted testimony that her income was unlikely to increase substantially in the foreseeable future).

[FN387]. Grogan v. Garner, 498 U.S. 279, 286, 111 S. Ct. 654, 659 (1991).

[FN388]. It appears, not surprisingly, that opinions placing a burden of persuasion on the debtor, but specifying that the burden requires only a preponderance of the evidence, do not tend to contain hopelessness language. See, e.g., supra cases cited in note 125.

[FN389]. United States v. Kephart, 170 B.R. 787, 791 (W.D.N.Y. 1994).

[FN390]. Cf. Mathews v. HEAF (In re Mathews), 166 B.R. 940, 945 (Bankr. D. Kan. 1994) (noting the distinction between the two standards, applying a hopelessness standard under § 523(a)(8)(B), but not explaining how unconscionability can be worse than hopelessness); accord Malloy v. United States (In re Malloy), 155 B.R. 940, 945 & n.5 (E.D. Va. 1993), aff’d, 23 F.3d 402 (4th Cir. 1994).

[FN391]. See, e.g., Ansonia Bd. of Educ. v. Philbrook, 479 U.S. 60, 67- 69, 107 S. Ct. 367, 371-72 (1986) (holding that “undue hardship” under Civil Rights Act of 1964, 42 U.S.C. § 2000e(j), occurs whenever accommodation to employee’s religious beliefs results in more than a de minimis cost to employer; employer is not required to show that each alternative accommodation proposed by employee would result in undue hardship); Bryant v. Better Bus. Bureau of Greater Md., 923 F. Supp. 720, 737, 740 (D. Md. 1996) (finding that “undue hardship” under Americans with Disabilities Act, 42 U.S.C. § 12111(10)(A) (1994), requires substantially more difficulty or expense than under Civil Rights Act; even so, statute requires balancing a number of factors, not merely ability to pay); cf. Black’s Law Dictionary 1528 (6th ed. 1990) (defining “undue” as “[m]ore than necessary; not proper; illegal”); Random HouseDictionary of the English Language (2d ed. unabridged 1987) at 2066 (defining “undue” as “unwarranted,” “inappropriate”).

[FN392]. See Salvin, supra note 26, at 171.

[FN393]. See infra note 492.

[FN394]. Such a presumption would not have shifted the burden of persuasion, but might have shifted the burden of production. Fed. R. Evid. 301. The conclusion that such a presumption existed under § 523(a)(8)(B) would implicitly affirm that the burden of persuasion must remain on the creditor in an undue hardship inquiry. See 29 Am. Jur. 2d Evidence § 195 (1994) (Congress removed the original provision, in Fed. R. Evid. 301, that a presumption shifted both the burden of persuasion and the burden of production). It would also contradict the presumption in the debtor’s favor under § 707(b). See supra note 23 and accompanying text.

[FN395]. See, e.g., In re James, 120 B.R. 582, 585-86 (Bankr. W.D. Okla. 1990) (finding that declaration by debtor’s attorney that proposed reaffirmation agreement will not impose undue hardship on debtor requires counsel to examine complex issues on which debtors may be incapable of making and articulating an informed decision); see generally Comment, Hunt, Reaffirmation Agreements: A Fight for Enforceability under the New Bankruptcy Code, 12 Cumb. L. Rev. 431, 448-49 (1982).

[FN396]. See e.g., 20 U.S.C. § § 1078-6(a)(1)(A) & 1078- 6(b) (1994) (monthly payments demanded from defaulting borrower shall not be more than is reasonable and affordable based upon the borrower’s total financial circumstances); 20 U.S.C. § 1078(c)(3)(A)(i)(II) (1994) (forbearance from repayment obligation is mandatory at borrower’s request if student loan payments would equal or exceed 20% of income); 20 U.S.C. § 1078(b)(2)(B) (1994) (indicating concern for unreasonable loss by government); 20 U.S.C. § 1095a(a)(1) & (7) (1994) (forbidding garnishment exceeding 10% of disposable pay, or occurring within first 12 months of continuous employment following a prior involuntary termination of employment).

[FN397]. Compare 34 C.F.R. § § 682.210(b)(3)(i) & 682.210(b)(5)(iv) (1996) (deferment for mothers) and infra note 335 (“full- time employment” exists at 30 hours per week) with Koch v. PHEAA (In re Koch), 144 B.R. 959, 965 (Bankr. W.D. Pa. 1992) (a married debtor with a one- year-old child should take a part-time evening job in addition to his full-time day job) and Silliman v. Nebraska Higher Educ. Loan Program (In re Silliman), 144 B.R. 748, 751 (Bankr. N.D. Ohio 1992) (finding approximately 50% of loans incurred by debtor to attend truck-driving school nondischargeable on grounds that debtor, living on welfare, can work more than 15 hours per week while caring for her one-year-old son; debtor has husband but he graduated from same school, has been unemployed for a year, and his debt (if any) to that school is discharged) and Kraft v. NYSHESC (In re Kraft), 161 B.R. 82, 86 (Bankr. W.D.N.Y. 1993) (finding that debtor working 38 hours per week is not working particularly long hours). See also Mayer v. PHEAA (In re Mayer), 198 B.R. 116, 119, 127 (Bankr. E.D. Pa. 1996) (taking account of offsetting day care expense and a typical young child’s need for mother’s constant care); Turner v. Detroit and Northern Savings (In re Turner), 69 B.R. 62, 64 (Bankr. D. Minn. 1986) (finding that decision to have children while incurring student loan demonstrates neither irresponsibility nor bad faith); Windland v. United States Dep’t of Educ. (In re Windland), 201 B.R. 178, 183 (N.D. Ohio 1996) (holding that undue hardship exists where debtor cannot afford to provide minimal experiences for her daughters and cannot save for their higher education). See infra note 531 and accompanying text.

[FN398]. See infra notes 550 & 551.

[FN399]. Wiese, supra note 35, at 448 n.21 (1984), citing Bankruptcy Commission Report, supra note 27, at 140 n.16, which states:

[T]he claimant must establish that the debtor can pay the educational debt from future earnings or other wealth, such as trust fund income or an inheritance. This requirement recognizes that in some circumstances the debtor, because of factors beyond his reasonable control, may be unable to earn an income adequate both to meet the living costs of himself and his dependents and to make the educational debt payments.

See infra text accompanying notes 496-505.

[FN400]. Bankruptcy Commission Report, supra note 27, at 140 n.15.

[FN401]. See supra note 34.

[FN402]. See Vaughn v. Illinois State Scholarship Comm’n, 151 B.R. 481, 486 (C.D. Ill. 1993) (reversing judgment of nondischargeability, reasoning that it is always true that the debtor might get a good job in the future). See also Connor v. Mich. Dep’t of Treasury (In re Connor), 83 B.R. 440, 444 (Bankr. E.D. Mich. 1988) (finding hopeless debtor not entitled to discharge because discharge would be irrelevant); Robinson v. United States Dep’t of Educ. (In re Robinson), 193 B.R. 967, 971 (Bankr. N.D. Ala. 1996) (denying discharge for debtor with sporadic employment history, qualifying for welfare, because she experienced no hardship, since her mother takes care of her and her two children when she is unemployed); Salvin, supra note 26, at 180; infra notes 488-99 and accompanying text; cf. Malloy v. United States (In re Malloy), 155 B.R. 940, 947 (E.D. Va. 1993), aff’d, 23 F.3d 402 (4th Cir. 1994) (finding that debtor failed unconscionability test, see supra note 389 and accompanying text, partly because mother helped him with clothing expenses).

[FN403]. The NBRC was “an independent commission established pursuant to the Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, 108 Stat. 4106. . . to investigate and study issues relating to the Bankruptcy Code; solicit divergent views of parties concerned with the operation of the bankruptcy system; evaluate the advisability of proposals with respect to such issues; and prepare a report to be submitted to the President, Congress and the Chief Justice. . . .” NBRC Fact Sheet, (last modified Nov. 26, 1997) <http:// http://www.nbrc.gov>. Pursuant to that statute, the NBRC ceased to exist on Nov. 19, 1997. Id. The NBRC is distinct from the Bankruptcy Commission of the 1970s. See supra note 27.

[FN404]. NBRC Report, supra note 44, § 1.4.5.

[FN405]. See supra notes 178-361 and accompanying text.

[FN406]. See infra notes 433-555 and accompanying text.

[FN407]. PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. (CRR) 532 (Bankr. E.D. Pa. 1979).

[FN408]. See supra note 367.

[FN409]. Johnson at 536.

[FN410]. Id. at 536-44; but see id. at 544-45 (providing a relatively terse summary of the opinion stating that undue hardship exists where (a) debtor’s income during maximum repayment period will likely be insufficient to support loan repayment plus a subsistence level of living and either (b) the hardship is due to circumstances beyond the debtor’s control or (c) the circumstances indicate that discharge was not a dominant reason for filing bankruptcy and that the debtor’s earnings prospects have not appreciably benefited from the education).

[FN411]. E.g., the opinion states that, if the debtor was irresponsible and was barred from discharge under the predecessor of § 523(a)(8)(A), then discharge should not be denied unless the mechanical test would not be met but for the irresponsible behavior. Id. at 542. While reviewing the debtor’s work background under the mechanical test, the judge uncertainly commented that “[a] person’s employment history might better be applied as a test of good faith.” Id. at 537 [emphasis added]. In discussing the good faith test, he stated that the question was “whether the debtor has been careful to minimize expenditures,” but then admitted that “[t]he question of reasonableness of a petitioner’s monthly expenses has already been considered in the mechanical test. . . .” Id. at 541. See infra text accompanying note 445.

[FN412]. See, e.g., Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1015 (Bankr. N.D. Ind. 1987) (applying Johnson mechanical and good faith tests, but not its policy test); Love v. Dep’t of Health, Educ. & Welfare (In re Love), 28 B.R. 475, 478 (Bankr. S.D. Inc. 1983) (adding two other factors to Johnson and criticizing the “slip once and you lose” approach, preferring to apply various tests simultaneously); PHEAA v. Birden (In re Birden), 17 B.R. 891, 894 (Bankr. E.D. Pa. 1982) (good faith and policy tests not applied in granting discharge); compare Woodcock v. Chemical Bank (In re Woodcock), 149 B.R. 957, 963 (Bankr. D. Colo. 1993), aff’d, No. 93-M-705 (D. Colo. Feb. 17, 1994), aff’d, 45 F.3d 363 (10th Cir. 1995) (applying good faith and policy tests despite failure of mechanical test) with Craig v. PHEAA (In re Craig), 64 B.R. 854, 857 (Bankr. W.D. Pa. 1986), appeal dismissed, 64 B.R. 857 (W.D. Pa. 1986) and North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 243 (Bankr. D. Minn. 1986) (holding that analysis stops when mechanical test is failed); compare United States v. Brown (In re Brown), 18 B.R. 219, 223 (Bankr. D. Kan. 1982) (Johnson policy test corrects failure of good faith test) with Conner v. Ill. State Scholarship Comm’n (In re Conner), 89 B.R. 744, 749 n.20 (Bankr. N.D. Ill. 1988) (policy test is flawed and does not correct failure of good faith test); see infra notes 441, 470, 506 & 520 and accompanying text; see also variations cited in Dunham & Buch, supra note 122, at 699-700.

[FN413]. See supra note 410.

[FN414]. Bryant v. PHEAA (In re Bryant), 72 B.R. 913 (Bankr. E.D. Pa. 1987).

[FN415]. Cf. GAO High-Risk Report, supra note 209, at 23 (the student loan program originally depended on the assumption that states would create their own guaranty agencies, but many failed to do so).

[FN416]. Bryant, 72 B.R. at 915 n.2.

[FN417]. Id. at 918; see supra notes 344-50 and accompanying text.

[FN418]. Bryant, 72 B.R. at 916. The poverty measure has had a broad following. See citations in Salvin, supra note 26, at 162-63 n.149. See also supra note 346; infra note 528.

[FN419]. Although seeming to be objective, poverty is in fact quite subjective. Salvin, supra note 26, at 185-86. Economists have at least three general approaches for determining poverty, involving absolute, relative, and sociocultural definitions. Id. at 189-90. The analysis of poverty can include such factors as health insurance benefits, taxes (with and without Earned Income Tax Credit), government benefits of all varieties, and home equity, if any, with the result that anywhere between 9% and 22% of the population can be defined as living below the poverty level. See Statistical Abstract, supra note 184, table 740 (1996); infra note 422.

[FN420]. Bryant, 72 B.R. at 919; see supra note 173 and accompanying text.

[FN421]. Bryant, 72 B.R. at 915, 917. Many courts have examined the “totality of circumstances.” See infra note 431 and accompanying text. Courts have long sought “unique” or “extraordinary” circumstances. See, e.g., Johnson, 5 Bankr. Ct. Dec. (CRR) at 538. “Extraordinary” may mean anything out of the ordinary. Id.

[FN422]. “[L]ow income amounts to an extraordinary circumstance in itself,” Bryant, 72 B.R. at 921, suggesting that the poverty line was only an indicator of extraordinary circumstances, not a bright line, and that in all events the search is for an extraordinary circumstance. Also, the income figure being used was after taxes and other mandatory payroll deductions, id. at 916 n.4, 923 (suggesting that other expenses incurred because of employment might also be subtracted); extraordinary expenses were subtracted from after- tax income before deciding whether the debtor is living at the poverty level, id. at 925; for that purpose, medical expenses were extraordinary even if the underlying condition did not interfere with the debtor’s ability to work, as long as those expenses were not part of a non-unique, non-extraordinary minimal standard of living, id. One wonders whether Bryant would also support the subtraction, from after-tax income, of e.g., nondischarged debts and tuition for classes to improve one’s future.

[FN423]. Bryant, 72 B.R. at 916; compare Claxton v. Student Loan Marketing Ass’n (In re Claxton), 140 B.R. 565, 569 (Bankr. N.D. Okla. 1992) (holding that if debtors’ below-poverty-level income does not prevent them from proposing and maintaining a Chapter 13 plan, then it need not prevent them from making student loan payments after the completion of that plan) with Goranson v. PHEAA (In re Goranson), 183 B.R. 52, 55 (Bankr. W.D.N.Y. 1995) (noting that the fact that Chapter 13 debtors may endure a standard of living even lower than that required for undue hardship does not prove that they have a surplus available for loan repayment).

[FN424]. Bryant, 72 B.R. at 917.

[FN425]. See supra notes 40-46 and accompanying text.

[FN426]. In re Patronek, 121 B.R. 728, 729 n.1 (Bankr. E.D. Pa. 1990).

[FN427]. (In re Mayer), 198 B.R. 116, 124-25 (Bankr. E.D. Pa. 1996).

[FN428]. See, e.g., Reyes v. Okla. State Regents for Higher Educ. (In re Reyes), 154 B.R. 320, 323 (Bankr. E.D. Okla. 1993); TERI v. Lekowicz (In re Lekowicz), 119 B.R. 237, 237-38 (D. Colo. 1990).

[FN429]. See, e.g., Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1013 (Bankr. N.D. Ind. 1987); Evans v. HEAF (In re Evans), 131 B.R. 372, 376 (Bankr. S.D. Ohio 1991); Simons v. HEAF (In re Simons), 119 B.R. 589, 592 (Bankr. S.D. Ohio 1990); Brunner v. NYSHESC, 831 F.2d 395, 396 (2d Cir. 1987); infra notes 513 & 526 and accompanying text.

[FN430]. See, e.g., infra text accompanying note 441.

[FN431]. See, e.g., Coleman v. HEAF (In re Coleman), 98 B.R. 443, 447-48 (Bankr. S.D. Ind. 1989); Daugherty v. First Tenn. Bank (In re Daugherty), 175 B.R. 953, 959 (Bankr. E.D. Tenn. 1994) (construing Cheesman as a case-by- case decision); Johnson v. USA Funds, Inc. (In re Johnson), 121 B.R. 91, 93 (Bankr. N.D. Okla. 1990) (noting that rigid adherence to a particular test robs court of discretion); Law v. TERI (In re Law), 159 B.R. 287, 292 (Bankr. D.S.D. 1993) (adopting case-by-case approach); Simons v. HEAF (In re Simons), 119 B.R. 589, 593 (Bankr. S.D. Ohio 1990) (noting that attempts to articulate bright line standards have proven unsatisfactory); Wegfehrt v. Ohio Student Loan Comm’n (In re Wegfehrt), 10 B.R. 826, 830 (Bankr. N.D. Ohio 1981) (case must be examined on its own facts and circumstances); Andrews v. S.D. Student Assistance Corp. (In re Andrews), 661 F.2d 702, 704 (8th Cir. 1981) (quoting Wegfehrt with approval); see also supra note 421 and accompanying text; but see Coveney v. Costep Servicing Agent (In re Coveney), 192 B.R. 140, 142 n.1 (Bankr. W.D. Tex. 1996) (case-by-case approach gives courts too much discretion). Notwithstanding its name, the “totality of circumstances” approach is not always applied so broadly as to take account of all the factors mentioned in this article.

[FN432]. See, e.g., Ford v. NYSHESC (In re Ford), 22 B.R. 442, 445 (Bankr. W.D.N.Y. 1982) (applying Kohn but granting discharge, noting that Congress wanted nondischarge only in cases of extreme bankruptcy abuse); supra note 412 and accompanying text; infra note 442; infra text accompanying notes 520-54; compare e.g., supra note 373 (applying Johnson, Frech denied discharge, admitting that the outcome was “unjust”) with Zackerman, supra note 10, at 705- 06 (Johnson decision itself was fairly lenient and granted discharge).

[FN433]. In re Faish, No. 93-01686 (Bankr. M.D. Pa. July 12, 1994), rev’d, No. 94-1353 (M.D. Pa. Feb. 21, 1995); see supra notes 407-13 and accompanying text (discussing Johnson).

[FN434]. PHEAA v. Faish (In re Faish), 72 F.3d 298 (3d Cir. 1995), cert. denied, 116 S. Ct. 2532 (1996).

[FN435]. See supra note 377 and accompanying text.

[FN436]. Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 756 (S.D.N.Y. 1985) (court’s approach may seem draconian, but it serves the congressional purpose).

[FN437]. Brunner v. NYSHESC, 831 F.2d 395 (2d Cir. 1987).

[FN438]. In re Roberson, 999 F.2d 1132 (7th Cir. 1993).

[FN439]. See supra notes 266-306 and accompanying text.

[FN440]. See supra notes 362-86 and accompanying text.

[FN441]. Brunner, 831 F.2d at 396.

[FN442]. Roberson, 999 F.2d at 1135-36; Johnson, 5 Bankr. Ct. Dec. (CRR) at 544; but see Brunner, 831 F.2d at 396-97 (applying third test despite failure of second test); contra Zackerman, supra note 10, at 725 (suggesting that Brunner leaves open the possibility of analyzing the totality of circumstances if the debtor fails one of the first two tests).

[FN443]. Roberson, 999 F.2d at 1136. Cf. infra text accompanying notes 544-51.

[FN444]. See supra notes 307-54 & infra notes 469-95 and accompanying text.

[FN445]. Johnson, 5 Bankr. Ct. Dec. (CRR) at 540.

[FN446]. See supra text accompanying notes 369-73.

[FN447]. Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 754-55 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987).

[FN448]. Id. at 753.

[FN449]. Id. at 758; accord, Sallie Mae v. Plotkin (In re Plotkin), 164 B.R. 623, 624 n.1; Windland v. United States Dep’t of Educ. (In re Windland), 201 B.R. 178, 184 (N.D. Ohio 1996).

[FN450]. See supra note 329.

[FN451]. See supra note 189.

[FN452]. See supra note 187.

[FN453]. See supra note 245.

[FN454]. See supra note 188.

[FN455]. But it may be difficult or impossible to comply with this aspect of Brunner. See, e.g., Woodcock v. Chemical Bank (In re Woodcock), 149 B.R. 957, 963 (Bankr. D. Colo. 1993), aff’d, No. 93-M-705 (D. Colo. Feb. 17, 1994), aff’d 45 F.3d 363 (10th Cir. 1995) (finding that, by any test of undue hardship, the act of requesting deferments showed bad faith); Walcott v. USA Funds, Inc. (In re Walcott), 185 B.R. 721, 724-25 (Bankr. E.D.N.C. 1995) (applying Brunner, discharge denied to debtor who made a substantial but unsuccessful effort to find employment during the four years since graduation; bankruptcy was filed shortly after she ran out of deferments and with only one $50 payment on the debt). Cf. infra note 546 and accompanying text (discussing debtors who were unable to make any payments).

[FN456]. See, e.g., infra notes 470-99 and accompanying text.

[FN457]. This result would oppose the default-avoidance purpose of forbearances. See supra note 188.

[FN458]. See Brunner, 46 B.R. at 758. Cf. Harrison v. NYSHESC (In re Harrison), 60 B.R. 9 (Bankr. E.D.N.Y. 1986) (debtor filed complaint to determin dischargeability before her loans had even matured; complaint of undue hardship was premature at best).

[FN459]. The regulations governing guaranteed student loans in 1979, the year of Ms. Brunner’s graduation from college, provided for a grace period of up to twelve months. 45 C.F.R. § 177.100(c) (1979).

[FN460]. Brunner, 46 B.R. at 753.

[FN461]. Id. at 757.

[FN462]. Id. See supra note 282, infra note 550.

[FN463]. Id.

[FN464]. In re Roberson, 999 F.2d 1132, 1136 (7th Cir. 1993); but see Brunner, 46 B.R. at 758 (district court did note that student loans were debtor’s primary reason for requesting discharge). See supra note 264 and accompanying text; infra text accompanying note 483.

[FN465]. See infra text accompanying notes 513-19.

[FN466]. Johnson, 5 Bankr. Ct. Dec. (CRR) at 543 (quoting Revision Hearings, supra note 226, at 1095).

[FN467]. See supra notes 256-65 and accompanying text.

[FN468]. Daugherty v. First Tenn. Bank (In re Daugherty), 175 B.R. 953, 959 (Bankr. E.D. Tenn. 1994) (statute requires undue hardship, not good faith).

[FN469]. See supra note 441.

[FN470]. In re Roberson, 999 F.2d 1132, 1135 (7th Cir. 1993) (rejecting Johnson).

[FN471]. Roberson v. Illinois Student Assistance Comm’n (In re Roberson), 138 B.R. 885, 886 (N.D. Ill. 1992), rev’d on other grounds, 999 F.2d 1132 (7th Cir. 1993).

[FN472]. 138 B.R. at 886.

[FN473]. Id. (debtor made payments until his financial difficulties arose; the earliest such difficulty mentioned by the court is the layoff in Feb. 1990). On loans of $9,702 in principal amount, 999 F.2d at 1133, the balance remaining due (presumably on a ten-year repayment schedule) at the time of trial in mid-1991 (including 1.5 years of accrued interest after payments had stopped) was $7,614. 138 B.R. at 887. The actual amount he would have to repay might include post-trial interest and late fees, and presumably would include the creditor’s attorney fees and costs. See supra note 192 and accompanying text.

[FN474]. He earned 10% less in 1989 than in 1988, and the divorce, which was evidently bitter, was granted in early April 1990. 138 B.R. at 886.

[FN475]. 999 F.2d at 1134. Cf. Nichols v. Regents of Univ. of California (In re Nichols), 15 B.R. 208, 209 (D. Me. 1981) (debtor with history of psychiatric disorders and related problems with alcohol was unable to cope with stressful job or situation).

[FN476]. 138 B.R. at 887.

[FN477]. Id. at 886.

[FN478]. Id. at 886-87.

[FN479]. Id. at 887.

[FN480]. Id. at 886-87.

[FN481]. See supra notes 407-13 and accompanying text.

[FN482]. See 138 B.R. at 887, aff’d, 999 F.2d 1137 (noting that his medical problems did not appear “insurmountable”); infra note 489.

[FN483]. 138 B.R. at 887.

[FN484]. Id.

[FN485]. Roberson, 999 F.2d at 1137-38 (granting a judicial “deferment” ending on Dec. 11, 1993). See infra text accompanying notes 540-43.

[FN486]. 138 B.R. at 888.

[FN487]. Roberson, 999 F.2d at 1137-38; compare supra note 75 (regarding filing fee) with Craig v. Loan Servicing Center (In re Craig), 56 B.R. 479, 481 (Bankr. W.D. Mo. 1985) (requiring no additional fee for re-filing). See infra notes 536-44 and accompanying text.

[FN488]. Roberson based its interpretation of step two upon the following segment from House Report 95-595, supra note 16:

[E]ducational loans are different from most loans. They are made without business considerations, without security, without cosigners, and rely [ [] for repayment solely on the debtor’s future increased income resulting from the education. In this sense, the loan is viewed as a mortgage on the debtor’s future.

999 F.2d at 1135-36. That segment is taken out of context, however. Immediately after, the Report stated as follows:

This Committee rejected that approach in 1967 as unworkable, and it is rejected in this bill. Further, the abuses have not been significant enough to warrant special treatment for educational debts. . . . Finally, if the loans are granted too freely and that is what is causing the increase in bankruptcies, then the problem is a general problem, not a bankruptcy problem. The loan program should be tightened, or collection efforts should be increased. If neither of those alternatives is acceptable, then the loan programs should be viewed as general social legislation that has an associated cost. It is inappropriate to view the program as social legislation when granting the loans, but strictly as business when attempting to collect. Such inconsistency does not square with general bankruptcy policy.

House Report 95-595, supra note 17, at 134 (1977). See supra notes 35 & 324 and accompanying text (a different version of § 523(a)(8) became law, as part of a compromise between House and Senate whose details remain undisclosed).

[FN489]. See supra notes 362-86 and accompanying text.

[FN490]. See, e.g., Conner v. Illinois State Scholarship Comm’n (In re Conner), 89 B.R. 744, 748, 750 (Bankr. N.D. Ill. 1988) (acknowledging that repayment would impose undue hardship for “the next few years,” postponing beginning of repayment period for four more years, and doubling the repayment period to 20 years); supra text (emphasized) accompanying note 17; supra notes 187 & 352 and accompanying text; cf. supra text accompanying note 335.

[FN491]. See Craig v. PHEAA (In re Craig), 64 B.R. 854, 857 (Bankr. W.D. Pa. 1986), appeal dismissed, 64 B.R. 857 (W.D. Pa. 1986) (denying discharge; applying ten-year look-ahead from a point in time seven years after the bankruptcy filing and finding that things had improved somewhat in the intervening years, although only enough to permit debtor to make reduced payments); infra text accompanying note 540; but see Leppaluoto v. Combs (In re Combs), 101 B.R. 609, 615 (9th Cir. BAP 1989) (holding that rights of the parties are established according to the facts in existence at the time of filing the bankruptcy petition); Sobh v. Empire of America (In re Sobh), 61 B.R. 576, 580 (E.D. Mich. 1986) (Congress wanted hardship determinations to be made without awaiting arbitrary time limits); compare Claxton v. Student Loan Marketing Ass’n (In re Claxton), 140 B.R. 565 (Bankr. N.D. Okla. 1992) (repayment period under Chapter 13 begins five years later, when debtors’ Chapter 13 plan ends) with Goranson v. PHEAA (In re Goranson), 183 B.R. 52, 55 (Bankr. W.D.N.Y. 1995) (noting that debtor’s willingness to make sacrifices for three to five years under Chapter 13 does not imply ability to make such sacrifices indefinitely).

[FN492]. A case may be reopened for cause, in the court in which the case was closed, on motion of the debtor or other party in interest pursuant to § 350(b). Fed. R. Bankr. P. 5010. See, e.g., Craig v. PHEAA (In re Craig), 64 B.R. 854, 855-56 (Bankr. W.D. Pa. 1986), appeal dismissed, 64 B.R. 857 (W.D. Pa. 1986) (reopening case five years after bankruptcy to add creditor’s name to schedule and file complaint to determine dischargeability; reopening does not change the original calculation of the number of years that have passed for purposes of § 523(a)(8)(A)); Andrews v. South Dakota Student Assistance Corp. (In re Andrews), 661 F.2d 702, 705 n.5 (8th Cir. 1981) (noting that if discharge is denied without prejudice, debtor can again seek relief); Brunner v. NYSHESC (In re Brunner), 46 B.R. 752, 758 (S.D.N.Y. 1985) (denying discharge without prejudice to debtor’s seeking relief again, citing Andrews); Conner v. Illinois State Scholarship Comm’n (In re Conner), 89 B.R. 744, 750 n.21 (Bankr. N.D. Ill. 1988) (noting that if restructured repayment schedule does not work out, debtor can always just file a new complaint based on changed circumstances); Sobh v. Empire of America (In re Sobh), 61 B.R. 576, 580 (E.D. Mich. 1986) (holding that, regardless of whether complaint to determine dischargeability is denied with or without prejudice, debtor may file another complaint based on new facts without having to file new petition in bankruptcy); see also Tanski v. United States (In re Tanski), 195 B.R. 408, 411 (Bankr. E.D. Wis. 1996) (finding HEAL loans that were nondischargeable in debtor’s 1987 Chapter 7 bankruptcy under statute requiring unconscionability for such discharge would be dischargeable in debtor’s 1995 Chapter 13 bankruptcy pursuant to § 523(b) if such loans meet the requirements of § 523(a)(8)). The one-year limitation of Fed. R. Civ. P. 60(b) does not apply, Fed. R. Bankr. P. 9024, but presumably the “reasonable time” limitation does. See supra notes 81 (laches and estoppel) & 87 (bankruptcy court may decline to reopen case); 28 U.S.C.A. § 1930 (West 1997) (Historical & Statutory Notes: Judicial Conference Schedule of Fees) (filing fees prescribed by 28 U.S.C. § 1930(a) (1994), see supra note 75, must be paid upon reopening, unless the reopening is to correct an administrative error or for actions related to the debtor’s discharge).

[FN493]. Roberson, 999 F.2d at 1137.

[FN494]. It appears that, in recent years, Mr. Roberson may have had some problems in holding steady employment for reasons other than the mere lack of a driver’s license. See 999 F.2d at 1137 (“much” but not necessarily all of his difficulty in that regard stemmed from the transportation problem). The court provides no indication as to whether those problems were due to alcoholism or some other factor. Also, the court does not indicate how Mr. Roberson would obtain medical care for his health problems or, if applicable, his drinking problem during the intervening years. Absent treatment, it would appear that the court speculates that any such problems would simply clear themselves up with the passage of time and, perhaps, the imposition of hardship by its ruling. See supra note 319 and accompanying text; infra note 550.

[FN495]. There is no indication that the debtor received any form of deferment or forbearance on repayment, but the district court indicates, confusingly, that his debts accrued for only two years before the bankruptcy filing. 138 B.R. at 887. See supra note 191 (loan repayment period typically limited to 10 years).

[FN496]. Roberson, 999 F.2d at 1136 (quoting Bankruptcy Commission Report, text set forth supra note 399).

[FN497]. Id.

[FN498]. See supra text accompanying note 17.

[FN499]. See Salvin, supra note 26, at 182 (distinguishing negligence from the intentional abuse that the law was designed to prevent, and noting that judicial moralizing is common in bankruptcy cases, especially those involving the poor); Skaggs v. Great Lakes Higher Educ. Corp. (In re Skaggs), 196 B.R. 865, 867 (Bankr. W.D. Okla. 1996) (argument against irresponsibility is better made to Congress than to courts). See also Ryman, supra note 41, at 210 (many present-day judges uncritically embrace ideals that reflect the values of upper-class 18th-century English judges).

[FN500]. See supra note 442 and accompanying text.

[FN501]. Perkins v. Vermont Student Assistance Corp., 11 B.R. 160 (Bankr. D. Vt. 1980).

[FN502]. Roberson, 999 F.2d at 1136.

[FN503]. Perkins, 11 B.R. at 161.

[FN504]. Compare e.g., Woodcock v. Chemical Bank (In re Woodcock), 149 B.R. 957, 962-63 (Bankr. D. Colo. 1993), aff’d, No. 93-M-705 (D. Colo. Feb. 17, 1994), aff’d, 45 F.3d 363 (10th Cir. 1995) (rejecting allowance for replacing 11-year-old truck) with North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 242 n.7 (Bankr. D. Minn. 1986) and Conner v. Illinois State Scholarship Comm’n (In re Conner), 89 B.R. 744, 748 (Bankr. N.D. Ill. 1988) (taking account of need to replace aging vehicle) and Fox v. PHEAA (In re Fox), 163 B.R. 975, 981-82 (Bankr. M.D. Pa. 1993) (debtor could have justified a reserve of more than $92 per month for maintenance or replacement of aging car). Cf. infra notes 529-31 and accompanying text.

[FN505]. See supra note 344 and accompanying text.

[FN506]. PHEAA v. Faish (In re Faish), 72 F.3d 298, 303-05 (3d Cir. 1995), cert. denied, 116 S. Ct. 2532 (1996) (rejecting Bryant and Johnson in favor of Brunner).

[FN507]. Faish, 72 F.3d at 302 (quoting Dunham & Buch, supra note 122, at 702).

[FN508]. See, e.g., supra text accompanying notes 369 & 446-47.

[FN509]. See supra notes 375-86 and accompanying text; infra note 526.

[FN510]. Faish, 72 F.3d at 303.

[FN511]. Regardless of the test chosen, most debtors are denied discharge. Dunham & Buch, supra note 122, at 702. See infra note 555 and accompanying text.

[FN512]. Faish, 72 F.3d at 303-304.

[FN513]. See supra text accompanying note 417; see also supra note 345 and accompanying text.

[FN514]. Faish, 72 F.3d at 304.

[FN515]. Mayer v. PHEAA (In re Mayer), 198 B.R. 116 (Bankr. E.D. Pa. 1996).

[FN516]. Id. at 125; compare supra notes 263-65 and accompanying text with supra text accompanying note 442; see also supra note 233 (other student loan-related bickering between these two courts).

[FN517]. Matthews v. Pineo, 19 F.3d 121, 124 (3d Cir.).

[FN518]. Faish, 72 F.3d at 307.

[FN519]. See supra text accompanying note 389.

[FN520]. Cheesman v. TSAC (In re Cheesman), 25 F.3d 356 (6th Cir. 1994).

[FN521]. Cheesman, 25 F.3d at 359.

[FN522]. See Rice v. United States (In re Rice), 78 F.3d 1144, 1150 n.6 (6th Cir. 1996) (noting, in a HEAL loan case, the court’s rejection of the Johnson policy test and its approval, in that context, of certain principles in Faish); Zackerman, supra note 10, at 717 n.232.

[FN523]. Zackerman, supra note 10, at 717 n.232.

[FN524]. Id. at 360.

[FN525]. See supra note 173.

[FN526]. See, e.g., Ammirati v. Nellie Mae, Inc. (In re Ammirati), 187 B.R. 902, 906-907 (D.S.C. 1995), aff’d, 85 F.3d 615 (4th Cir. 1996) (discharging debtor supporting wife and granddaughter, both with medical problems, with monthly expenses of $4,350 and monthly income of $3,800, and $12,000 net equity in home, of all but $9,200 of loans originally totaling $60,000); Connecticut Student Loan Found. v. Bagley (In re Bagley), 4 B.R. 248, 250 (Bankr. D. Ariz. 1980) (dictionary definition of “undue” is “unreasonable” or “immoderate”); Correll v. Union Nat’l Bank of Pittsburgh (In re Correll), 105 B.R. 302, 304 (Bankr. W.D. Pa. 1989) (income as high as $26,300 qualified as “minimal”); Courtney v. Gainer Bank (In re Courtney), 79 B.R. 1004, 1013 (Bankr. N.D. Ind. 1987) (Kohn goes beyond the statute); Derby v. Student Loan Services (In re Derby), 199 B.R. 328, 329-30 (Bankr. W.D. Pa. 1996) (debtors not required to sell house to pay student loans, but see infra note 551; discharge premised on finding that illness may continue into the future); Fox v. PHEAA (In re Fox), 163 B.R. 975, 980 (Bankr. M.D. Pa. 1993) (court will not sentence an individual to a decade of poverty; question is whether repayment will jeo-pardize debtor’s ability to rebuild his or her life); Hinkle v. Wheaton College (In re Hinkle), 200 B.R. 690, 693 (Bankr. W.D. Wash. 1996) (abject poverty is not the standard); Hornsby v. TSAC (In re Hornsby), 201 B.R. 195, 199 (Bankr. W.D. Tenn. 1995) (discharging family of five with $36,000 annual gross income, $2,557 net monthly income, unspecified assets, and monthly expenses of $2,365 plus unlisted expenses); Hoyle v. PHEAA (In re Hoyle), 199 B.R. 518, 523 (Bankr. E.D. Pa. 1996) (rejecting poverty guideline); Mayer v. PHEAA (In re Mayer), 198 B.R. 116, 125 (Bankr. E.D. Pa. 1996)(very few debtors can live within the poverty guidelines); PHEAA v. Birden (In re Birden), 17 B.R. 891, 893 (Bankr. E.D. Pa. 1982) (discharge granted to Columbia Law School graduate who left his high- paying job because of personal difficulties); Price v. Dep’t of Health, Educ. and Welfare (In re Price), 25 B.R. 256, 258 (Bankr. W.D. Mo. 1982) (examining whether the debtor’s case presents the type of bankruptcy abuse that Congress had in mind); Skaggs v. Great Lakes Higher Educ. Corp. (In re Skaggs), 196 B.R. 865, 867 (Bankr. W.D. Okla. 1996) (family of five with $36,000 annual income and $150 monthly deficit is experiencing undeniably hard circumstances and living in an extraordinarily frugal manner); United States v. Brown (In re Brown), 18 B.R. 219, 223 (Bankr. D. Kan. 1982) (debtors’ monthly expenses of $2,465 exceeded income of $2,032; partially discharged); United Student Aid Funds, Inc. v. Pena (In re Pena), 207 B.R. 919, 922 (9th Cir. BAP 1997) (Cheesman does not require that debtor prove “exceptional circumstances” that would preclude any possibility of future financial improvement); Washington v. Virginia State Educ. Assistance Auth. (In re Washington), 41 B.R. 211, 215 (Bankr. E.D. Va. 1984) (married couple with pretax expenses of $800 per month, not including rent, clothing, medical expense, insurance, and other items [suggesting annual spending of roughly $20,000] held to be at the poverty level for purposes of determining undue hardship); Windland v. United States Dep’t of Educ. (In re Windland), 201 B.R. 178, 182 (N.D. Ohio 1996) (debtor with monthly income exceeding expenses by $209 discharged, based in part on court-suggested expenses that may arise in future). Cf. supra note 423.

[FN527]. The Cheesmans’ gross income was $15,676. Cheesman, 25 F.3d at 359. This fell $400 short of their monthly expenses. Id. at 360. Cf. Petition for Certiorari, TSAC v. Cheesman, No. 94-809 (U.S. 1995), at 5 (average monthly expenses were $1,594.50).

[FN528]. Cheesman, 25 F.3d at 359 (citing no authority, but presumably relying on 57 Fed.Reg. 5455-02 (Feb. 14, 1992)); see supra notes 334 & 419. Statistical Abstract, supra note 184, table 732 (1996) provides as follows, in pertinent part: Weighted Average Poverty Thresholds: 1980 to 1994

Size of Household 1980 1990 1992 1994

One person under age 65 4,290 06,800 07,299 07,710

Two persons under age 65 5,537 08,794 09,443 09,976

Three persons 6,565 10,419 11,186 11,821

Four persons 8,414 13,359 14,335 15,141

Five persons 9,966 15,792 16,952 17,900

[FN529]. Petition for Certiorari, TSAC v. Cheesman, No. 94-809 (U.S. 1995), at 29a. See supra notes 502-04 et seq. and accompanying text.

[FN530]. Cheesman, 25 F.3d at 359; see also Hornsby v. TSAC (In re Hornsby), 201 B.R. 195, 199 (Bankr. W.D. Tenn. 1995) (following Cheesman) (purchase of a newer car was good faith attempt by debtors to gain more control over their expenses).

[FN531]. Compare Cheesman, 25 F.3d at 358 (decision to send child to private school based on threat of corporal punishment at public schools) with Faish, 72 F.3d at 300, 307 (single mother concerned about quality of neighborhood and school district in which her son was growing up should have devoted her money to debt repayment rather than saving for a move to a better neighborhood). See Goranson v. PHEAA (In re Goranson), 183 B.R. 52, 57 n.6 (Bankr. W.D.N.Y. 1995)(family of four subsists on $150 per month so that it can afford $100 tuition for church school for two children); supra note 397 (cases evincing harsh and relaxed treatment of parental decisions); supra note 2 (§ 523(a)(8)(B) demonstrates concern with hardship for dependents).

[FN532]. See supra text accompanying note 490.

[FN533]. See supra notes 325-39 and accompanying text.

[FN534]. See, e.g., Andrews v. South Dakota Student Assistance Corp. (In re Andrews), 661 F.2d 702, 704-05 (8th Cir. 1981) (basing calculations on present expenses and employment and the risk that debtor would lose her job within next six months); Hornsby v. TSAC (In re Hornsby), 201 B.R. 201, 198 (Bankr. W.D. Tenn. 1995) (examining only “the next several years”); Mayer v. PHEAA (In re Mayer), 198 B.R. 116, 127 (Bankr. E.D. Pa. 1996) (noting that a significant portion of the loan would be repaid by the mid-point of the repayment period); see supra notes 490-91 and accompanying text; see also 34 C.F.R. § 682.210(h)(4) (1996) (in deferment context, employment estimate is based on a three-month look-ahead period).

[FN535]. Mrs. Cheesman had earned $651 per month at best, and Mr. Cheesman had earned $1,632 per month at best, plus another $200 from part-time work, Cheesman, 25 F.3d at 358, for a combined total of $2,483 per month.

[FN536]. Cheesman, 25 F.3d at 362 (Guy, J., dissenting).

[FN537]. Roberson, 999 F.2d at 1137.

[FN538]. Woodcock v. Chemical Bank (In re Woodcock), 149 B.R. 957 (Bankr. D. Colo. 1993) (Clark, J.) (denying discharge under § 523(a)(8) subsections (A) and (B)), aff’d, No. 93-M-705 (D. Colo. Feb. 17, 1994) (Matsch, C.J.), aff’d in part, rev’d in part and remanded, 45 F.3d 363 (10th Cir. 1995) (regarding § 523(a)(8) subsections (B) and (A), respectively) (Seth, J., dissenting in part; concurring in remand regarding subsection (A)), cert. denied, 516 U.S. 828, 116 S. Ct. 97 (1995) (regarding subsection (B)), on remand, Adv. Proc. No. 92-1924 PAC (Bankr. D. Colo. Feb. 9, 1996) (regarding subsection (A)) (Clark, J.) (discharging one loan exceeding maximum legal loan limits and denying discharge for the remaining loans), appeal dismissed, No. 96-AP-401 (D. Colo. Apr. 19, 1996) (Kane, J.) (declining to address merits regarding remaining disputed loans), rev’d and remanded, 104 F.3d 368 (10th Cir. 1996) (remanding for statement of reasons for dismissal), 212 B.R. 658 (D. Colo. 1997) (Kane, J.) (declining to state reasons for dismissal; addressing merits; denying discharge); pending No. 97-1374 (10th Cir. filed Oct. 2, 1997).

[FN539]. See Woodcock, No. 93-M-705 (D. Colo. Feb. 17, 1994), aff’d, 45 F.3d at 367 (affirming bankruptcy court’s finding that debtor failed Johnson mechanical, good faith, and policy tests as well as Bryant test); see also Salvin, supra note 26, at 164-66 (discussing Ford v. TSAC (In re Ford), 151 B.R. 135 (Bankr. M.D. Tenn. 1993)); cf. supra note 259 and accompanying text; infra notes 548 & 550.

[FN540]. Cheesman, 25 F.3d at 360-61 (18-month postponement); Roberson, 999 F.2d at 1137-38 (two-year postponement); see supra text accompanying note 487.

[FN541]. Cheesman, 25 F.3d at 361 (Guy, J., dissenting).

[FN542]. See supra notes 375-86 and accompanying text.

[FN543]. See supra note 492.

[FN544]. Cheesman, 25 F.3d at 360.

[FN545]. Woodcock, 149 B.R. at 963. The bankruptcy court did not reach a finding as to the dollar amount of payments made on the disputed loans, which the debtor’s testimony put at $1,154. Plaintiff’s Direct Testimony by Sworn Declaration (filed Dec. 21, 1992), Adv. Proc. No. 92-1924 PAC (Bankr. D. Colo. 1992). The creditor subsequently admitted that the correct number of payments was four. See Plaintiff’s Reply Brief in Support of Motion for Summary Judgment (filed Aug. 11, 1995), id., at 10. The court disregarded the debtor’s testimony that he had made $9,000 in payments on other student loans to the same lender. Id. at 22 & A-7; Petition for Certiorari, Woodcock v. Chemical Bank, No. 94-9242 (U.S. 1995), at 13 n.17. See supra note 243 and accompanying text (creditor’s duty to maintain good records).

[FN546]. Compare supra notes 449-68 with Hornsby v. TSAC (In re Hornsby), 201 B.R. 195, 200 (Bankr. W.D. Tenn. 1995) (following Cheesman) (observing that debtors utilized deferment and forbearance options and were unable to make any payments); see Mayer v. PHEAA (In re Mayer), 198 B.R. 116, 128 (Bankr. E.D. Pa. 1996) (noting that, given circumstances, it was difficult to expect debtors to have made any payments); PHEAA v. Birden (In re Birden), 17 B.R. 891, 894 (Bankr. E.D. Pa. 1982) (noting that debtor made no payments because he could not find his financial footing).

[FN547]. See supra text accompanying note 462.

[FN548]. The bankruptcy court wished the debtor well in his choice of a lower-paying career, finding that it was legitimate and was not undertaken to avoid repayment, but held nevertheless that the choice was made in bad faith and, in essence, that the debtor should abandon it if it did not provide sufficient income to pay for the education that led to the earlier, failed career. Woodcock, 149 B.R. at 963, aff’d, 45 F.3d at 367-68.

[FN549]. See Johnson, 5 Bankr. Ct. Dec. (CRR) at 544.

[FN550]. Compare Boston v. Utah Higher Educ. Assistance Auth. (In re Boston), 119 B.R. 162, 165 (Bankr. W.D. Ark. 1990) (holding that if debtor cannot find work commensurate with her education in her area, she must move elsewhere) with Hawkins v. Buena Vista College (In re Hawkins), 187 B.R. 294, 296, 299 (Bankr. N.D. Iowa 1995) (limiting job search to one geographic area was reasonable in light of family ties); compare Healey v. Mass. Higher Educ. (In re Healey), 161 B.R. 389, 394-95 (E.D. Mich. 1993) (criticizing career choice of debtor who had earned more in her previous career as a secretary than in her present job as a schoolteacher) with 20 U.S.C. § 1078- 10 (1994) (purpose of statute authorizing loan forgiveness for certain teachers is, in part, to encourage more to enter the teaching profession); compare N.D. State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235, 241 (Bankr. D. Minn. 1986) (holding that Johnson good faith test should take account of the practical limitations of the debtor’s vocational profile) with Kraft v. NYSHESC (In re Kraft), 161 B.R. 82, 86 (Bankr. W.D.N.Y. 1993) (holding that 18-month job search may indicate that debtor has few prospects within her chosen field, but debtor should be searching for work outside her field); see supra note 462 and accompanying text. See generally Karen Gross, The Debtor as Modern Day Peon: A Problem of Unconstitutional Conditions, 65 Notre Dame L. Rev. 165, 167 (1990) (requiring debtor to work to repay his creditors to obtain discharge is strikingly close to peonage, an involuntary servitude violative of the 13th Amendment).

[FN551]. See, e.g., Fox v. PHEAA (In re Fox), 163 B.R. 975, 982-83 (Bankr. M.D. Pa. 1993) (debtors who would probably surrender house that they could not afford to keep, despite wife’s recent entry into work force, partly because of husband’s recent voluntary switch to lower-paying position, not entitled to discharge); United States v. Conard (In re Conard), 6 B.R. 151, 153 (Bankr. W.D. Ky. 1980) (debtor’s obesity will be reduced, to his benefit, if he lacks money for food); Salvin, supra note 26, at 155-56, 182-83 (reviewing cases where courts criticized debtors’ decisions as to whether they should have roommates, which family members they should support, and which careers they should pursue, and arguing that such criticisms are contrary to basic notions of privacy and liberty); supra notes 344 & 397 and accompanying text.

[FN552]. Cheesman, 25 F.3d at 360.

[FN553]. See supra note 191.

[FN554]. See supra notes 286 & 292 (regarding educations not primarily oriented toward financial payoff).

[FN555]. Cheesman, 25 F.3d at 359; Woodcock, 45 F.3d at 367-68.

[FN556]. Plato, The Republic, at 473e (B. Jowett trans.).

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