573 B.R. 614
Bankr. D. Md.2017Background
- Debtor Yolande Essangui filed Chapter 7 and sued to determine dischargeability of a private CitiAssist loan (~$23,670 disbursed Mar. 20, 2008) used to finance a Medical Education Readiness Program (MERP) and living expenses; she later attended but did not complete Ross University School of Medicine.
- Loan was sold and ultimately held by GS2 Grantor Trust 2016-A (Defendant), which asserted the debt is nondischargeable under 11 U.S.C. § 523(a)(8)(A)(ii).
- Parties agreed § 523(a)(8)(B) (qualified education loan) and § 523(a)(8)(A)(i) were not at issue; the sole dispute was whether subsection (A)(ii) (“an obligation to repay funds received as an educational benefit, scholarship, or stipend”) covers a private loan used for educational purposes.
- Facts were undisputed; both parties moved for summary judgment and the court resolved the legal issue as a matter of law.
- The court examined statutory text, structure, canons of construction, BAPCPA’s 2005 amendments, and split case law interpreting (A)(ii).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 523(a)(8)(A)(ii) covers a private loan used for educational purposes | (Essangui) Subsection (A)(ii) applies only to funds that are educational benefits, scholarships, or stipends, not ordinary loans | (GS2) “Funds” includes loan proceeds; any loan used to obtain an educational benefit is excepted from discharge under (A)(ii) | The court held (A)(ii) does NOT cover ordinary loans used for education; the loan is dischargeable |
Key Cases Cited
- Duncan v. Walker, 533 U.S. 167 (statutory interpretation begins with text)
- Corley v. United States, 556 U.S. 303 (avoid rendering statutory language superfluous)
- Bullock v. BankChampaign, 569 U.S. 267 (exceptions to discharge construed narrowly)
- Healthkeepers, Inc. v. Richmond Ambulance Auth., 642 F.3d 466 (use text and structure together)
- In re Christoff, 527 B.R. 624 (9th Cir. BAP) (subsection (A)(ii) not equivalent to "loan received")
- In re Campbell, 547 B.R. 49 (Bankr. E.D.N.Y.) (statutory structure limits (A)(ii) to benefits like grants/stipends)
- In re Dufrane, 566 B.R. 28 (Bankr. C.D. Cal.) (interpreting (A)(ii) as excluding ordinary private loans)
- In re Micko, 356 B.R. 210 (Bankr. D. Ariz.) (example of broader approach including private loans)