Opinion
No. 77-1951
October 13, 1978
Discharge of Debts — Student Loans — Repayment Would Be Onerous and Burdensome
A student loan was dischargeable prior to a statutory five-year waiting period where the bankrupt's education was valueless in appraising his future income and a suggested repayment schedule would have been onerous and burdensome to him.
A state education assistance agency sought a determination that a sum owed to it by the bankrupt was non-dischargeable under 20 U.S.C.A. § 1087-3, the Higher Education Act of 1965, as amended, which provides that the loan could be released by a discharge in bankruptcy only if the discharge was granted after a five-year period beginning on the date of commencement of the repayment period. However, the statute also provided an exception to this five-year rule where the court "determines that payment from future income or wealth will impose an undue hardship on the debtor. . .".
The court found that the bankrupt has spent five years in college, but emerged without a degree. Moreover, his interrupted education was valueless in appraising his future income. A supervisor of the state agency testified that he has authority to extend a repayment schedule. However, a suggested repayment schedule to the bankrupt, who has no assets and whose net income was expended as soon as it came in, was onerous and burdensome. This was not the kind of debtor, observed the court, to whom Congress intended to deny a discharge, not a part-time truck driver whose net income ranged between $5200 and $7800 a year. Thus, the court determined that the debt was dischargeable. See Sec. 17a [§ 523] at ¶ 9226.