[author: Matthew Nash]

It has been 25 years since Brunner established the three-prong test for determining whether the repayment of student loans imposes an undue hardship on debtors and their families. These prongs are listed below:

  • You cannot maintain, based on current income and expenses, a minimal standard of living for yourself and your dependents if you were required to pay the student loans
  • Additional circumstances exist showing that your state of affairs is likely to persist for a significant portion of the repayment period of the student loans
  • You have made good faith effort to repay the loans

A recent case, Bene v. Educational Credit Management Corp. (In re: Bene), 2012 WL 2412037 (Bankr. W.D.N.Y. 6/26/12), has created a buzz among student loan lenders and litigants, as it may be the case that changes the game when it comes to the Brunner test and the dischargeability of student loans.

The U.S. Supreme Court has been asked to review what it takes to satisfy the second prong of the Brunner test. Roger J. Traversa's Petition for a Writ of Certiorari has been distributed to the justices and will be reviewed September 24, 2012. The petition states, "the second prong of the Brunner standard does not provide measureable goals against which to define undue hardship, or even additional circumstances.  Rather, the second prong leaves it to the vagaries of the trial courts to determine what comprises undue hardship on any particular day." It also goes on to state that "this is not an argument to throw out the Brunner standard, but interpretation of that standard must be revised to better reflect the underlying law."

The outcome of this Supreme Court review could bring about the gradual elimination of the Brunner standard and may also have a huge impact on student loan lenders and debtors alike. Stay tuned for additional updates on this review and its potential consequences.