Davis v. PHEAA, 608 B.R. 693

Debtor Jeffrey M. Davis (41) holds a J.D. and LL.M., works as a contract/document-review attorney, and earns about $60,000/year.
Davis filed Chapter 7 and received a discharge; he then brought an adversary seeking to discharge ~$351,034 of student-loan debt held by the U.S. Department of Education, ECMC, and AccessLex under 11 U.S.C. § 523(a)(8).
Debt composition: DOE loans (~$204,774), Access private loans (~$127,760), ECMC loans (~$18,500). He made some payments only on DOE loans; none on ECMC or Access loans.
Financial facts highlighted at trial: no housing costs at trial time, monthly child-related payments (~$1,450 total), discretionary spending (concert travel, regular large ATM withdrawals, streaming services), and limited job search activity in recent years.
The court applied the Seventh Circuit’s adoption of the Brunner undue-hardship test and considered whether Davis satisfied all three prongs (minimal standard of living, likelihood the situation will persist, and good-faith repayment efforts).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether student loans are dischargeable under §523(a)(8) (undue hardship)	Davis: repayment would cause undue hardship given income, childcare costs, age, and employment history	Creditors: Davis earns ~ $60k, has not minimized expenses or maximized income, and hasn’t shown extraordinary circumstances	Denied — Davis failed to carry burden; loans nondischargeable
Brunner prong 1 — Minimal standard of living	Davis: current income/expenses (including child support/daycare) leave him unable to repay	Creditors: Davis has discretionary spending, no housing costs, and could make greater sacrifices	Denied — Davis has not shown he cannot maintain a minimal standard of living if required to repay
Brunner prong 2 — Likelihood condition will persist	Davis: limited career advancement, recent child, age make inability to repay likely to persist	Creditors: Davis has marketable education/skills, stable work history, and no extraordinary impairment	Denied — no additional exceptional circumstances shown to predict long-term inability to repay
Brunner prong 3 — Good-faith repayment efforts	Davis: enrolled in DOE income-driven plans and made some DOE payments	Creditors: Davis made no payments on ECMC/Access loans and hasn’t pursued consolidation or repayment options for them; limited income-maximizing efforts	Denied — payments sparse/unspecified; no payments or meaningful efforts for ECMC/Access loans; not in good faith

Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987) (formulated the three-part undue-hardship test)
Roberson v. Sid Huddy (In re Roberson), 999 F.2d 1132 (7th Cir. 1993) (Seventh Circuit adoption of Brunner framework)
United States v. Wood, 925 F.2d 1580 (7th Cir. 1991) (debtor bears burden to challenge nondischargeability presumption)
Hanson v. Educational Credit Management Corp., 397 F.3d 482 (7th Cir. 2005) (student loans presumptively nondischargeable)
Tetzlaff v. Educational Credit Management Corp., 794 F.3d 756 (7th Cir. 2015) (limits judicial gloss on Brunner; require ‘‘additional circumstances’’ to show persistence)
Goulet v. Educational Credit Management Corp., 284 F.3d 773 (7th Cir. 2002) (examples of circumstances satisfying second Brunner prong)
Stern v. Marshall, 564 U.S. 462 (2011) (bankruptcy court constitutional authority principles)
Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015) (consent to bankruptcy adjudication may be express or implied)