Document Type

Working Paper

Publication Date



bankruptcy, discharge, student loans, debt, undue hardship, Brunner, Johnson, totality of circumstances, poverty, financial aid


A debtor seeking to discharge student loans in bankruptcy must prove that paying the debt would cause an undue hardship upon him and his dependents. Undue hardship, however, is an undefined concept, flummoxing debtors, creditors and judges alike. The result of this ambiguity is rampant inconsistency in the manners in which similarly-situated debtors (and creditors) are treated by the courts. This article argues that the undue hardship standard should be replaced by a framework that uses debt service thresholds to determine the propriety of federal student loan bankruptcy discharges. Eligibility for discharge would depend on outstanding loan amounts, debtor income history, federal poverty guidelines, and the type of academic program in which the loan was incurred. The goals of the framework would be two-fold: 1) to provide an impartial, economical, and uniform means of assessing the propriety of student loan discharges, and 2) to provide debtors facing crushing student loan debt and few prospects for repaying it with a simplified avenue of relief in bankruptcy.