Garcia v. US Department of Education, 24-05067

Debtor Belinda Ana Garcia, after receiving a Chapter 7 bankruptcy discharge, sued the U.S. Department of Education (DOE) to challenge the non-dischargeability of her federal student loans, claiming undue hardship.
Garcia accumulated approximately $99,000 in student loans starting in the 1990s to finance her undergraduate and graduate education.
She sought a consent judgment jointly with the DOE, both parties agreeing that her loans would be dischargeable based on claimed undue hardship.
The court reviewed Garcia’s employment history, income, expenses, and ongoing care for her granddaughter, but found that her explanations for leaving higher-paying jobs and her choices regarding family care lacked sufficient external compulsion or documentation.
Garcia’s evidence showed she had some ability to pay under available income-driven repayment plans, and her financial situation was likely to improve once her dependent granddaughter reached the age of majority.
The Court independently analyzed the presented facts under the Brunner test, as required by federal law, to determine whether repayment would pose an undue hardship.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Should student loans be discharged as undue hardship?	Garcia cannot afford to pay loans; she faces undue hardship supporting a dependent.	DOE agrees loans are dischargeable by consent based on stipulated facts of undue hardship.	Court denied discharge; found inadequate evidence of undue hardship under Brunner.

Must the court independently find undue hardship when parties stipulate?	Garcia argued joint agreement should suffice for discharge.	DOE consented to judgment.	Court held it must independently assess undue hardship regardless of party agreement.
Did Garcia meet Brunner’s minimal living standard prong?	Claimed her income is just sufficient for basic expenses, nothing left for loans.	N/A	Court found she has enough disposable income for repayment under some plans.
Did Garcia meet Brunner’s additional circumstances and good faith prongs?	Claimed caregiving and health issues limit prospects; tried to make payments in good faith.	N/A	Court found her employment and expense choices insufficient and not compelled by external forces; no persistent, uncontrollable hardship demonstrated.

United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (Supreme Court requires independent court finding of undue hardship to discharge student loan debt)
Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (Second Circuit standard for undue hardship for student loan discharge; adopted by Fifth Circuit)
United States Dep’t of Educ. v. Gerhardt, 348 F.3d 89 (Fifth Circuit adoption and application of the Brunner test for student loan discharge)
Matter of Thomas, 931 F.3d 449 (Fifth Circuit emphasizing demanding Brunner standard for student loan discharge)