A police officer walks outside the United States Supreme Court building in Washington, DC, the United States, May 13, 2021. REUTERS / Andrew Kelly
June 21, 2021 – McCoy versus USA, No. 20-886, cert. Rejected, 2021 WL 2519103 (U.S. June 21, 2021).
The High Court on June 21 denied Thelma McCoy’s motion for certiorari seeking review of a decision by the U.S. 5th Court of Appeals that she took the test under Brunner v New York Higher Education Services Corp., 831 F.2d 395 (2d.) Cir. 1987) for paying off her student loan debt as “undue hardship”.
McCoy claimed that when faced with the definition of undue hardship, the appeals courts are “deeply divided” between the rigid Brunner test used on most racetracks and the “holistic, fair approach” of the set of circumstances- Tests by the 8th US Circuit Court of Appeals and in other circles.
The two approaches “differ widely in both application and outcome,” and “Supreme Court intervention is necessary to unify this important and recurring issue,” she said in her January petition.
She also argued that her case was “an ideal means” of resolving the county conflict because if her case had been filed in a jurisdiction other than Brunner, that court would have exercised its discretion to “consider all the facts that existed for an undue hardship are relevant. “
McCoy had gone to college at 40 and had a bachelor’s degree, then a master’s in 2006, and a Ph.D. in 2014, according to court records, she borrowed $ 175,000 to fund her education.
McCoy suffered serious injuries during her PhD and had difficulty finding work after graduation due to her persistent disabilities.
McCoy filed for Chapter 7 waiver in 2016 in the US Bankruptcy Court for the Southern District of Texas and initiated adversarial proceedings against the US Department of Education to settle their student loan debt, which had risen to $ 350,000.
Pursuant to Section 523 (a) (8) of the Bankruptcy Act, 11 USCA Section 523 (a) (8), student loans are excluded from relief unless a debtor can demonstrate that repaying the loan “is undue hardship”.
The law does not define “unreasonable harshness”, but most circuits, including the 5th circuit, use the Brunner test.
The test requires borrowers to meet all three requirements: that they cannot maintain a minimum standard of living when they have to repay the loan, “there are additional circumstances” that indicate that this condition is likely to persist over the long term, and they attempted repayment in good faith.
The bankruptcy court concluded that McCoy, then 60, failed the second level of the test and, as a result, her student loans were not deductible.
Both the U.S. District Court for the Southern District of Texas and the 5th District upheld this.
The 5th District noted that the “additional set-up” required to satisfy the second prong was not in place, as McCoy’s critical health problems emerged before she took out “the bulk of the loan,” and her health problems “her did not prevent them from obtaining their doctorate and “various forms of employment.”
McCoy’s petition was supported by consumer law scholars and consumer rights groups who filed amicus briefs in support.
The government replied in its May 7 letter that the “practical difference”[s]”between the Brunner test and the entirety test are” limited “and do not currently justify a review.
“Although the 8th District has described the totality approach as ‘less restrictive’ than the Brunner Framework … it has also found that the burden it places on debtors is ‘rigorous’ and has recognized that the distinction between the Standards ‘may not be that important’, “said the US in its briefing.
Claudia W. Frost, Haley E. Jankowski, Kelsi B. Corkran, and Thomas M. Bondy of Orrick, Herrington & Sutcliffe represented McCoy, while Michael S. Raab and Michael Shih of the US Department of Justice represented the government.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which are committed to trust principles of integrity, independence and bias. Westlaw Today is owned by Thomson Reuters.
source https://collegeeducationnewsllc.com/scotus-declines-review-of-texas-womans-student-loan-discharge-denial/
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