Case Summary:
Debtors Amy and Dennis Eliason sued the Bank of North Dakota to have Amy’s student loan debt discharged as an undue hardship under Code section 523(a)(8). Amy took out the loans to attend Globe University in Eau Claire, with the goal of becoming a certified medical assistant. Amy was misled about the medical assistant program at Globe and was thus never able to obtain her medical assistant certification. The Court discharged the loans. Applying the Brunner test, it was clear that Amy and Dennis maintained a minimal standard of living. Most of their expenses were at or below the national standards for a household of three. Second, the Court found that Amy and Dennis have never been able to significantly increase their earning potential, and each have only held low-skilled hourly wage positions for most of the past decade. Dennis has been found administratively disabled for several years and cannot work more than a couple of hours each day. And Amy, having never obtained her medical assistant certification, has been working only part-time, low-wage positions, in between periods of unemployment due to a complicated pregnancy and the deaths of her parents. Also, since the loans were in default, the Bank of North Dakota conceded that if they were found nondischargeable, the entire balance would be due and owing after the case was closed. Lastly, the Court found that the Debtors had made a good faith effort to stay on top of their loans but were simply unable to. The Debtors received at least two deferments and a forbearance during the loan repayment period. They were on a zero-dollar monthly payment schedule for their federal student loans. In sum, the Debtors satisfied the prongs of Brunner, and the loans were discharged.

Statute/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - student loans

Key Terms:
Brunner Test
Student Loans
Undue Hardship