Emory Bankruptcy Developments Journal


John Ellison


Although its roots precede the twenty-first century, the student loan debt “issue” in America has evolved in recent years into a full-blown “crisis.” Recently surpassing credit cards and auto loans, student loan debt is the second-largest type of consumer debt in the United States, behind only mortgage debt. Prior to the Higher Education Amendments of 1976, bankruptcy provided an avenue through which student loan debt could be discharged. A series of legislative amendments, however, led to the imposition of 11 U.S.C. § 523(a)(8), which bars the discharge of student loan debt absent a showing of “undue hardship.” Courts have constructed the “undue hardship” standard into a major hurdle for student debtors seeking a fresh start through bankruptcy.

For most courts, demonstrating “undue hardship” requires a debtor to satisfy three prongs of a strict elements test. Referred to by some in the judiciary as the “certainty of hopelessness” standard, the test has come under scrutiny in the legal community. Many, including federal judges, the American Bar Association, and the American Bankruptcy Institute, have called for reform to better effectuate the relief sought by student loan debtors.

This Comment posits that the proposed FRESH START Through Bankruptcy Act of 2021 is the most viable solution to the student loan crisis and would address it in two primary ways. First, it would eliminate the need for student loan borrowers to satisfy the “undue hardship” standard, and would make discharge attainable—provided the debtor has already been in repayment for at least ten years. Second, it would address the underlying issues of “credentialism” and increased tuition costs, at least in part, through a “clawback” provision aimed to increase institutional accountability.