Mazloom v. Navient Solutions, Inc., 648 B.R. 1

Debtor Stephanie Mazloom took a $38,400 private “EXCEL Grad Loan” from Nellie Mae (now serviced by Navient) in Aug. 2006 to finance medical school; the promissory note named Kasturba Medical College (KMC) and a TILA statement showed funds were to be sent to KMC.
Mazloom later attended the American University of Antigua (AUA) as part of an AUA/KMC “twinning program.”
The promissory note contained boilerplate language stating the loan was made “under a program that includes Stafford Loans…funded in part by non-profit organizations, including governmental units,” but no contemporaneous documents corroborated any such broader program.
Mazloom filed Chapter 7 in 2018, received a general discharge, later reopened the case and sued to determine dischargeability of the private student loan under 11 U.S.C. § 523(a)(8).
Cross-motions for summary judgment addressed two issues: (1) whether the loan was made under a program funded in whole or part by a governmental unit (§ 523(a)(8)(A)(i)), and (2) whether the loan was a qualified education loan under § 523(a)(8)(B) (i.e., incurred to pay qualified higher education expenses).
Court found no evidence of a funded “program” beyond boilerplate promissory-note language, but concluded the loan was incurred to pay qualified higher-education expenses for a Title IV school identified in the note (KMC), rendering the loan non-dischargeable under § 523(a)(8)(B).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the private loan was made “under any program funded in whole or in part by a governmental unit” (§ 523(a)(8)(A)(i))	Mazloom: No—there is no concrete documentary or financial link showing a program that meaningfully involved a gov’t or nonprofit; the language is boilerplate.	Navient: Yes—the EXCEL Grad Loan was part of a broader program that also offered Stafford loans; promissory-note language and witness testimony suffice.	Held for Mazloom: summary judgment granted—no genuine evidence of a funded program beyond boilerplate language.
Whether the private loan is a “qualified education loan” (§ 523(a)(8)(B))—i.e., incurred to pay qualified higher-education expenses at an eligible (Title IV) institution	Mazloom: The loan should be tested by substance; she attended AUA (a non-Title IV school) so loan funds were not used for Title IV attendance and thus should be dischargeable.	Navient: The loan’s stated, specific purpose at signing was to pay KMC (a Title IV school); the purpose test should look to the contract terms at formation.	Held for Navient: summary judgment granted—court adopts a bright-line purpose test focusing on the loan’s specific stated purpose at signing (KMC), so the loan is a non-dischargeable qualified education loan under § 523(a)(8)(B).

Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary-judgment standard)
Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (burden of proof in dischargeability actions)
Kawaauhau v. Geiger, 523 U.S. 57 (U.S. 1998) (narrow construction of exceptions to discharge)
In re O'Brien, 419 F.3d 104 (2d Cir. 2005) (nonprofit must make “any meaningful contribution” to qualify a program under § 523(a)(8)(A)(i))
Homaidan v. Sallie Mae, Inc., 3 F.4th 595 (2d Cir. 2021) (rejecting overly broad conception of a ‘‘program’’ that would swallow § 523(a)(8))
Conti v. Arrowood Indem. Co. (In re Conti), 982 F.3d 445 (6th Cir. 2020) (purpose/substance test for qualified education loans)
Busson-Sokolik v. Milwaukee Sch. of Eng’g (In re Busson-Sokolik), 635 F.3d 261 (7th Cir. 2011) (purpose test analysis)
Murphy v. Pa. Higher Educ. Assistance Agency (In re Murphy), 282 F.3d 868 (5th Cir. 2002) (qualified education loan analysis)
In re Jean Baptiste, 584 B.R. 574 (Bankr. E.D.N.Y. 2018) (documentary evidence showing a formal relationship supports finding of a funded program)