2022 Spring Essay Contest Winners

• Bankruptcy Solutions
• Foreclosure Solutions
• Modification & Negotiation
• Credit Card Debt Relief

The Former Essay Topic for the Spring 2022 Scholarship (Currently Closed)

This Former Spring 2022 Essay Contest is Now Closed. It was Open Until May 15, 2022. Winners have been selected and their photos and essays are in the process of being posted.

Before 1976, many debtors in bankruptcy proceedings could discharge student loan debt, whether public or private.  In 1976, Congress amended the Higher Education Act of 1965 to include Section 439A, which makes student loans non-dischargeable in bankruptcy unless (a) more than five (5) years have passed since the repayment plan was entered into, or (b) not discharging the loans would cause the debtor and their dependents an undue hardship.  In 1978, Congress passed the Bankruptcy Reform Act, commonly referred to as the Bankruptcy Code, which has been periodically amended to further limit a debtor’s ability to discharge student loan debt.  The most recent changes to the code were passed in 2005 when Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”).  Under BAPCPA, Congress excepted certain student loans from discharge, namely, (i) if they were made, insured or guaranteed by the government, (ii) made under any loan program funded in whole or in part by the government or nonprofit institution, or (iii) private loans which are considered “qualified education loans”.               

Currently, the majority of Bankruptcy Courts apply the three-pronged “Brunner Test”, established in Brunner v. New York State Higher Education Services Corp. (S.D.N.Y. Oct. 14, 1987) to discharge a student loan based upon an “undue hardship”.  To establish an undue hardship under Brunner, a debtor must show (1) based upon debtor’s current income and expenses, they cannot maintain a normal standard of living for themselves or their dependents if forced to repay the loans, (2) the state of affairs is likely to persists for a significant portion of the repayment period, and (3) the debtor has made good-faith efforts to repay the loans.  A minority of circuits apply the “totality of the circumstances test” which does not require the third-prong in Brunner.

According to the Education Data Initiative, approximately $43.2 million American student borrowers are in debt by an average of $39,351 each.^[1] Currently, student loan debt in the United States totals $1.75 trillion and grows six (6) times faster than the nation’s economy.  Id.               

Please Discuss:

(1) both the history and current bankruptcy court policies regarding the dischargeability of student loan debt;

(2) how this policy could be changed to balance the competing interests of alleviating the burden imposed on student borrowers versus preventing abuse by borrowers; and

(3) to what extent should bankruptcy law and the bankruptcy courts be used to resolve the student loan dilemma, and how can bankruptcy policy be part of larger national policy approach to remedy the crisis in funding higher education.               

The essay should not exceed 2,000 words and should use facts and references to support an argument for a position 

Winners for Spring 2022 Scholarship contest