Goodbye Brunner: Rethinking the Standard for Discharging Student Loan Debt in Bankruptcy

by Maria Tobergte, Associate Member, University of Cincinnati Law Review Vol. 93

I. Introduction

Total student loan debt in the United States stands at a staggering $1.773 trillion.[1] The average student borrower spends roughly twenty years paying off their student loans.[2] Debtors who find that their student loans are impossible to repay, may attempt to seek relief through the U.S. bankruptcy courts. However, the odds of discharging student loans in bankruptcy are slim. Between 2011 and 2019, more than 99.8% of debtors who filed for bankruptcy were unsuccessful in discharging their student loans.[3] Although the chances of success have increased in recent years, the odds of discharge, as well as the legal standard controlling the discharge of student loans, remain unclear.[4]

This article explains the “undue hardship” standard, which debtors must prove to successfully discharge their student loans in bankruptcy. The article will then dive into the split among the federal circuit courts of appeal to determine what undue hardship entails. Section II will discuss the aims of the Bankruptcy Code (the “Code”), Congress’s approach to undue hardship and discharging student loan debt, and lastly, the various tests courts have formulated when determining whether a debtor has demonstrated undue hardship. Section III will analyze these tests and advocate for the majority approach to be abandoned and for the minority approach to be adopted by more courts. Finally, Section IV will conclude by emphasizing the need for Congress to codify the minority approach to promote a consistent application of bankruptcy law throughout the United States.

II. Background

Broadly speaking, bankruptcy may offer debtors an opportunity to discharge their debts. The Code seeks to provide honest debtors with a financial “fresh start,” leaving the debtor with no liability for discharged debts.[5] However, the right to discharge is not absolute.[6] Instead, the Code limits which debts are dischargeable and which individuals can file for bankruptcy under certain chapters of the Code.[7] One of these limits, found in Section 523(a)(8), provides that certain student loans may not be discharged in bankruptcy unless the bankruptcy court determines that paying off the loans would impose an “undue hardship on the debtor and the debtor’s dependents.”[8]

Although  it was clear that Congress’s intent in enacting this provision was to prevent recent college graduates from escaping their student loan obligations to begin lucrative careers, Congress noticeably refrained from defining undue hardship.[9] Accordingly, this burden fell on federal bankruptcy and circuit courts. Determining precisely what constitutes undue hardship, and thus, whose loans are eligible for discharge, has led to a divide among the circuit courts. As a result of this split, federal bankruptcy law is applied inconsistently throughout the United States, and whether an individual’s student loans will be discharged in bankruptcy proceedings depends on the rule of law applied where the debtor resides, rather than the text of the statute.[10]

A. The Majority Approach: The Brunner Test

In 1987, the United States Court of Appeals for the Second Circuit adopted a test for determining undue hardship in Brunner v. New York State Higher Education Services Corp.[11] Since then, the Brunner test has become widely adopted by a majority of bankruptcy and circuit courts today, largely due to its predictability.[12] Under the Brunner test, a debtor must satisfy each of the three elements to prove undue hardship; if they do not, their loans are not dischargeable.[13] The elements are as follows:

“(1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself or 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 loans; and (3) that the debtor has made good faith efforts to repay the loans.”[14]

The first part of the Brunner test focuses on a debtor’s current income.[15] If the necessity of making the debtor’s monthly student loan payments would cause the debtor’s standard of living to fall below a minimal level, this element is satisfied.[16]  This factor is applied to the future financial situation of the debtor,  and if this calculation of income and expenses commits the debtor to a “life of poverty” for the term of the loan, it imposes undue hardship on the debtor.[17]

Under the second element, courts often search for exceptional circumstances, such as illness, a large number of dependents, a lack of usable job skills, or a combination of these to satisfy this prong.[18] Debtors have often been “required to demonstrate not only a current inability to pay but additional circumstances which strongly suggest that the current inability to pay will extend for a significant portion of the repayment period of the loan.”[19]

Lastly, the district court imposed the good faith requirement on debtors to prevent opportunistic students from abusing the bankruptcy system to shed the financial commitment they agreed to when they took out student loans.[20] To mitigate the risk the government assumes when providing loans to students who typically have poor credit, these students are stripped of the “refuge of bankruptcy in all but extreme circumstances,” thus ensuring that only those individuals who are in dire need of discharge are relieved of the financial burden.[21]

B. Expansions of the Brunner Test

Some circuits have added additional factors to the Brunner test which make it almost impossible for debtors to discharge student loan debt.[22] The United States Court of Appeals for the Fourth Circuit interpreted the second Brunner factor (whether the debtor’s situation is likely to exist for a significant portion of the loan repayment period) as necessitating a showing of “a certainty of hopelessness”—the hopelessness confirming that the loans will be impossible to repay—since the debtor’s hardship in this situation must be greater than the typical hardship accompanying typical bankruptcy.[23]

Similarly, the United States Court of Appeals for the Fifth Circuit and Third Circuit demand a debtor show “total incapacity” in the future to repay their debts; being in financial straits will not suffice.[24] Proof of total incapacity means that the debtor would likely be paying off their student loans until death.[25] The Fifth Circuit has stated that “student loans are not to be discharged unless requiring repayment would impose intolerable difficulties on the debtor.”[26] Under these iterations of the Brunner test, a debtor’s student loans will be discharged only rarely, if ever.[27]

C. The Minority Approach: The Totality of the Circumstances Test

The United States Court of Appeals for the Eighth Circuit takes a broader approach to interpreting undue hardship. Rather than adhere to the element-driven nature of the Brunner test, the Eighth Circuit embraces a totality of the circumstances approach (“Totality Test”).[28] In Long v. Education Credit Management Corp., the Eighth Circuit emphasized that the Totality Test complies with standards of fairness and equity because it heavily focuses on the “unique facts and circumstances that surround the particular bankruptcy.”[29] The Totality Test considers:

“(1) the debtor’s past, present, and reasonably reliable future financial resources; (2) a calculation of the debtor’s and her dependent’s reasonable necessary living expenses; and (3) any other relevant facts and circumstances surrounding each particular bankruptcy case. Simply put, if the debtor’s reasonable future financial resources will sufficiently cover payment of the student loan debt—while still allowing for a minimal standard of living—the debt should not be discharged.”[30]

This test requires courts to specifically consider the debtor’s current financial and employment circumstances, including expenses, assets, and income, as well as the potential positive or negative adjustments to such variables in the future.[31] Notably, this test does not require courts to review the debtor’s past conduct for “good faith.”[32]

III. Discussion

As the law operates today, whether a debtor’s student loans will be discharged in bankruptcy depends on the circuit they live in. For instance, if a debtor resides in Maryland, Virginia, West Virginia, North Carolina, and South Carolina, they must satisfy the Fourth Circuit’s exacting “certainty of hopelessness” standard before their debt may be discharged.[33] On the other hand, debtors residing in the Eighth Circuit’s domain fare better, for those circuit courts apply the more flexible Totality Test. Therefore, not only do the differing approaches in deciphering undue hardship create a lack of uniformity in bankruptcy law, but they also unfairly affect debtors who reside in circuits where the Brunner test, or an expansion of it, is applied.

A. Abandon the Brunner Test

Although a majority of bankruptcy and circuit courts utilize the Brunner test, popularity does not equal merit.[34]  Critics of the test have called it “overly rigid,”[35] a “human traged[y] of our time,” and have urged for courts to adopt a “more humane” test.[36] Due to the Brunner test’s conjunctive, stringent nature, it operates formulaically to preclude any debtors—perhaps prematurely—from obtaining relief if they fail any one of the prongs. This harsh approach undoubtedly succeeds in furthering Congress’s intent of preventing former students from abusing the bankruptcy system to discharge their financial obligations before beginning their careers. While the Brunner test fulfills Congress’s intent, it also prevents debtors in true financial crisis from utilizing the bankruptcy system to discharge student loans.[37]

For example, when courts applying the Brunner test deny discharge to debtors who have defaulted on their student loans due to disability or illness, these debtors on the brink of financial ruin suffer because the Brunner test fails to make a distinction between dishonest and honest debtors.[38] Debtors whose life circumstances drastically changed after taking out student loans—whether due to family deaths, disability, unemployment, or sickness—are not the individuals that Congress intended to prevent from using the bankruptcy system to their advantage. But, because the Brunner test narrows in on its three elements rather than evaluating the debtor’s situation as a whole and determining whether the discharge is equitable, the application of the Brunner test harms honest debtors in the process.

The bankruptcy court that formulated the Brunner test also conceded that there is “no specific authority” for the third element of the Brunner test, the good faith requirement.[39] Thus, even though this element may further Congress’s intent, it is not statutorily sound nor equitable as applied to honest debtors, especially to those debtors who meet the first two elements of the Brunner test, but later fail the good faith requirement. Although the good faith requirement was initially narrowly construed, it has expanded into a morality test that calls into question a “myriad of the debtor’s life choices and past conduct.”[40] Congress has delineated when a debtor’s past conduct should be called into question under Section 523 to render a debt non-dischargeable, such as debts obtained by actual fraud, pretenses, or debts based on the malicious and willful injury of another.[41] Therefore, had Congress intended for a debtor’s past conduct to be relevant in discharging student loan debt, it likely would have added such a provision to Section 523(a)(8) of the Code. In the absence of such a specification, it seems unfair for courts to impose the good faith requirement on debtors.

Lastly, some circuits’ expansion of the Brunner test to incorporate standards such as “certainty of hopelessness” and “total incapacity” has created a nearly insurmountable standard for debtors. The heightened requirements hinder the Code’s goal of providing a fresh start. While discharging student loans in bankruptcy should not be easy, and the bankruptcy system should not be a place where opportunistic former students can shirk their student loans, it also should not be virtually impossible for those in genuine financial distress to obtain relief.[42]

B. The Totality Test Produces More Equitable Results

The flexibility that the Totality Test provides makes it a more suitable test for courts to utilize when assessing undue hardship. Whereas the Brunner test requires each element of its test to be met, the factors in the Totality Test afford judges the discretion to weigh the facts and circumstances of each particular debtor to determine whether the discharge is equitable and appropriate. The Totality Test essentially focuses on this one question: will the debtor be able to maintain a minimal standard of living while repaying the loans, based on the debtor’s expenses, income, and other relevant factors?[43] With this latitude, judges need not consider the debtor’s “good faith” efforts to make loan repayments, but they may consider other factors making loan repayment more or less likely. Such factors consist of the ratio of the student loan to the total indebtedness, whether there is a long-term disability of the debtor, whether the debtor has made efforts to defer payment, whether the dominant purpose of the bankruptcy petition was to discharge student loans, and the debtor’s ability to obtain gainful employment in the area of study.[44] By incorporating these factors into an undue hardship analysis, courts avoid the mechanical nature of the Brunner test and can better evaluate the debtor’s circumstances holistically. Additionally, should judges feel as if it would be inequitable to discharge a debtor’s entire student loan amount, they have the leeway to limit the remedy as appropriate and discharge the debt partially. [45]

Judges applying the Totality Test are also better equipped to effectuate the fresh start policy of the Code and provide relief to debtors whose circumstances require it. It should be emphasized, however, that advocating for the Totality Test to be adopted does not equate to advocating for student loan discharge to be a cakewalk. Rather, the Totality Test still requires judges to critically consider the debtor’s financial situation and refuse discharge if loan repayment is feasible, albeit difficult.[46] Since Congress intended to prevent recent graduates from shedding their student loans before beginning lucrative careers, when judges consider the debtor’s “reasonably reliable financial future resources” under the Totality Test, the potential of a promising career may preclude the debtor from unfairly taking advantage of the bankruptcy system. If debtors have failed to seek employment, this would also weigh against discharge. The Totality Test simply seeks to relieve honest debtors based on an evaluation of their circumstances while still ensuring that congressional intent is served.

Lastly, the Totality Test reflects a more modern approach. Formulated in 1987, the Brunner test is arguably outdated as applied to the student loan regime of the 21^st century. In 1996, the average college graduate had roughly $12,750 (as adjusted for inflation, this would be about $26,232 today)[47] in student loan debt when they left school.[48] Comparatively, for students who graduated college in 2024, the average debt per student was about $37,000.[49] The $11,000 increase in average student loan debt increases the need for a more flexible test to be applied. With its emphasis on assessing the debtor’s situation as a whole, the Totality Test better accounts for the economic realities that student debtors face as the cost of education and the cost of living continues to climb.

C. Congress Should Legislate the Definition of Undue Hardship

Given that the Supreme Court denied certiorari in 2021 to hear a case that would determine the undue hardship standard, it is unlikely for the Supreme Court to address the issue soon.[50] Therefore, as the drafters of the Code, Congress should legislate what undue hardship entails. The time to do so is ripe. The total U.S. outstanding student loan debt is over $1.773 trillion and with a new administration in office that could potentially rescind President Biden’s 2022 guidance, which had outlined various ways to make discharging student loan debt easier in bankruptcy, Congress should act swiftly to resolve this split.[51] While President Biden’s 2022 guidance may have aided debtors, amending the Code would produce more permanent results.

While Congress need not modify its policy of Section  523(a)(8) and should still ensure that discharging student loan debt through bankruptcy is difficult, debtors deserve to understand the likelihood of discharge. Legislating a solution is the next step in ensuring that the Code is applied fairly and uniformly throughout the country.

IV. Conclusion

The current state of student loan dischargeability in bankruptcy is inconsistent and inequitable, leaving debtors at the mercy of whatever test their jurisdiction applies. While the Brunner test may increase predictability and has gained popularity, the minority approach of the Totality Test provides more flexibility for judges and offers more equitable results for debtors in dire need of financial relief. To rectify this split, Congress should codify the Totality Test or define the meaning of undue hardship to ensure that this area of bankruptcy law is applied seamlessly throughout the United States.

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[1] Melanie Hanson, Student Loan Debt Statistics, Educ. Data Initiative, https://educationdata.org/student-loan-debt-statistics (Mar. 16, 2025) [https://perma.cc/5BHH-ZB8H].  

[2] Melanie Hanson, Average Time to Repay Student Loans, Educ. Data Initiative, https://educationdata.org/average-time-to-repay-student-loans (July 21, 2024) [https://perma.cc/5C23-EYPB].

[3] Annie Nova, Biden made it easier for student loan borrowers in bankruptcy. This woman, who thought it was a joke, got $158,182 cleared, CNBC (June 12, 2024, 10:54 AM), https://www.cnbc.com/2024/06/12/bankruptcy-is-now-easier-for-student-loan-borrowers-now.html [https://perma.cc/3P4K-55FS].

[4] In 2022, the Department of Justice and the Department of Education released guidance to increase the chances for student loan borrowers to discharge their debt in bankruptcy. However, with a new administration in office, it is unclear whether this guidance will remain in effect. Nonetheless, the split among circuit courts in deciphering undue hardship remains unresolved. See Adam S. Minsky, Biden Administration Announces Huge Bankruptcy Changes for Student Loans, Forbes (Nov. 17, 2022, 1:01 PM), https://www.forbes.com/sites/adamminsky/2022/11/17/biden-administration-announces-huge-bankruptcy-changes-for-student-loans/ [https://perma.cc/5PQ5-79EA].

[5] Matthew S. Farina, Schoolbooks and Shackles: The Undue Hardship Standard and Treatment of Student Debt at Bankruptcy, 62 B.C. L. Rev. 1621, 1625 (2021).

[6] Chapter 7 – Bankruptcy Basics, United States Courts, https://www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics#) (last visited Feb. 26, 2025) [https://perma.cc/G9DL-GT4V].

[7] Id.

[8] 11 U.S.C. § 523(a)(8).

[9] Long v. Educ. Credit Mgmt. Corp. (In re Long), 322 F.3d 549, 554 (8th Cir. 2003).

[10] Brief for Consumer Bankruptcy Rights Center & National Association of Consumer Bankruptcy Attorneys as Amicus Curiae Supporting Petitioner at 3, McCoy v. United States, 141 S. Ct. 2794 (2021), cert. denied, (No. 20-886).

[11] Brunner v. N.Y. State Higher Educ. Serv. Corp., 831 F.2d 395 (2d Cir. 1987).

[12] G. Michael Bedinger VI, Time for a Fresh Look at the “Undue Hardship” Bankruptcy Standard for Student Debtors, 99 Iowa L. Rev. 1818, 1830 (2014).

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

[14] Id.  

[15] Brunner v. N.Y. State Higher Educ. Servs. Corp. (In re Brunner), 46 B.R. 752, 754 (S.D.N.Y. 1985), aff’d 831 F.2d 395 (2d Cir. 1987).

[16] Id.

[17] Id.

[18] Id. at 755.

[19] Id.

[20] Id.

[21] Id. at 756.

[22] Brief for Consumer Bankruptcy Rights Center & National Association of Consumer Bankruptcy Attorneys as Amicus Curiae Supporting Petitioner at 7, McCoy v. United States, 141 S. Ct. 2794 (2021), denied cert., (No. 20-886).

[23] Spence v. Educ. Credit Mgmt. Corp. (In re Spence), 541 F.3d 538, 544 (4th Cir. 2008).

[24] See U.S. Dep’t of Educ. v. Gerhardt (In re Gerhardt), 348 F.3d 89, 92 (5th Cir. 2003); Brightful v. Pa. Higher Educ. Assistance Agency (In re Brightful), 267 F.3d 324, 328 (3d Cir. 2001).

[25] See generally Goforth v. U.S. Dep’t of Educ. (In re Goforth), 466 B.R. 328, 338 (Bankr. W.D. Pa. 2012) (recognizing that total incapacity means that it is unlikely that the debtor will ever be able to honor their financial obligation).

[26] Thomas v. Dep’t of Educ. (In re Thomas), 931 F.3d 449, 454 (5th Cir. 2019) (emphasis added). The court also emphasized that the hardship on student loan debtors must be greater than typical bankruptcy circumstances; Id.

[27] Thomas v. U.S. Dep’t of Educ. (In re Thomas), 581 B.R. 481, 486 (Bankr. N.D. Tex. 2017), aff’d 931 F.3d 449 (5th Cir. 2019) (noting that the total incapacity standard creates an “incredibly high burden”).

[28] Long v. Educ. Credit Mgmt. Corp. (In re Long), 322 F.3d 549, 553 (8th Cir. 2003).

[29] Id. at 554.

[30] Id.

[31] Id. at 555.

[32] Id. at 554.

[33] FAQs – About the Court, United States Court of Appeals for the Fourth Circuit, https://www.ca4.uscourts.gov/faqs/faqs-about-the-court (last visited Mar. 25, 2025) [https://perma.cc/HZ6A-7H7D].

[34] Farina, supra note 5, at 1646.

[35] That’s a Brunner, Man. Supreme Court Declines to Revisit Overly Rigid Standard for Discharge of Student Loans in Bankruptcy, Patterson Belknap (June 23, 2021), https://www.pbwt.com/bankruptcy-update-blog/thats-a-brunner-man-supreme-court-declines-to-revisit-overly-rigid-standard-for-discharge-of-student-loans-in-bankruptcy.

[36] Donald L. Swanson, Student Loans: U.S. Supreme Court Can Overrule a Harsh Rule (McCoy v. U.S.), Am. Bankr. Inst., https://www.abi.org/feed-item/student-loans-us-supreme-court-can-overrule-a-harsh-rule-mccoy-v-us (last visited Mar. 25, 2025).

[37] Farina, supra note 5, at 1652 (“The stringency of the Brunner test’s second prong bars debtors that Congress did not intend to prevent from discharging student debt from a financial fresh start.”).

[38] Id. at 1653; see also Burton v. Pa. Higher Educ. Assistance Agency (In re Burton), 117 B.R. 167, 171 (Bankr. W.D. Penn. 1990) (denying discharge to a debtor who suffered from a virus that causes infectious mononucleosis, a severe bowel disorder, and depression); Tirch v. Pa. Higher Educ. Assistance Agency (In re Tirch), 409 F.3d 677, 682-83 (6th Cir. 2005) (denying discharge to a debtor who suffered from anxiety, attention deficit disorder, chronic depression, and colorectal surgery complications, even though it was apparent that the debtor could not maintain a minimal standard of living if forced to repay the loans); Thomas v. Dep’t of Educ. (In re Thomas), 931 F.3d 449, 452 (5th Cir. 2019) (denying discharge to a debtor who had to leave three jobs due to diabetic neuropathy); Raynor v. Educ. Credit Mgmt. Corp. (In re Raynor), 666 B.R. 540 (Bankr. E.D.N.C. 2024) (denying discharge to an elderly woman whose husband suffered from dementia for failure to meet the good faith prong of the Brunner test).

[39] Brunner v. N.Y. State Higher Educ. Servs. Corp. (In re Brunner), 46 B.R. 752, 755 (S.D.N.Y. 1985), aff’d 831 F.2d 395 (2d Cir. 1987).

[40] Brief for Consumer Bankruptcy Rights Center & National Association of Consumer Bankruptcy Attorneys as Amicus Curiae Supporting Petitioner at 10, McCoy v. United States, 141 S. Ct. 2794 (2021), cert. denied, (No. 20-886).

[41] Id.; See, e.g., 11 U.S.C. §§ 523(a)(2)(A) & (a)(6).

[42] In 2017, a bankruptcy court in the Fifth Circuit noted that it had never discharged a single student loan debt in fifteen years when contested by the lender. See Thomas v. U.S. Dep’t of Educ. (In re Thomas), 581 B.R. 481, 481 (Bankr. N.D. Tex. 2017).

[43] Farina, supra note 5, at 1655.

[44] See Morris v. Univ. of Ark. (In re Morris), 277 B.R. 910, 914 (Bankr. W.D. Ark. 2002) (reciting the nine factors courts use when applying the Totality Test).

[45]  Richard D. Burke, III, BANKRUPTCY—Student Loans for Life, The Discharge of Student Loans Under 11 U.S.C. § 523(A)(8)—Using the Eighth’s Circuit’s Totality-of-the-Circumstances Test and the Partial Discharge Method, 41 U. Ark. Little Rock L. Rev. 97, 107 (2018) (“Bankruptcy courts, across many different circuits, have interpreted Section 105 to allow partial discharge instead of an all-or-nothing discharge. If there is an undue hardship on the debtor, the debtor’s educational loans may be discharged partially because Section 105 gives the court the authority to do so.”).

[46] Id. (“Simply put, if the debtor’s reasonable future financial resources will sufficiently cover payment of the student loan debt—while still allowing for a minimal standard of living—the debt should not be discharged.”).

[47] CPI Inflation Calculator, U.S. Bureau of Labor Statistics, https://www.bls.gov/data/inflation_calculator.htm last visited Feb. 28, 2025).

[48] Melanie Hanson, Average Student Loan Debt by Year, Educ. Data Initiative, https://educationdata.org/average-student-loan-debt-by-year (Aug. 16, 2024) [https://perma.ccc/L4HC-XZS9].

[49] Id.

[50] McCoy v. United States, 141 S. Ct. 2819 (2021) cert. denied.

[51] Hanson, supra note 1; Annie Nova, Student loan borrowers may find bankruptcy harder under Trump, CNBC (Dec. 4, 2024), https://www.cnbc.com/2024/12/04/student-loan-borrowers-may-find-bankruptcy-harder-under-trump.html [https://perma.cc/CTS8-WG5J] (“In the first 10 months of President Biden’s policy, student loan borrowers filed more than 630 bankruptcy cases, a “significant” increase from recent years.”).

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