592 B.R. 334
8th Cir. BAP2018Background
- Debtor Richelle Page took an "Education One Undergraduate" loan through Chase in 2006; proceeds were disbursed but partly used for non-educational expenses.
- The loan application directed submission to The Educational Resources Institute, Inc. (TERI), a nonprofit; the loan was later sold to National Collegiate Student Loan Trust (NCSLT).
- Page filed bankruptcy in 2010, listed the loan, and received a general discharge; six years later she sued for a determination that the student loan debt was dischargeable under 11 U.S.C. § 523(a)(8).
- At summary judgment the bankruptcy court found the loan qualified as an "educational loan" and inferred TERI "funded" the program, holding the debt nondischargeable under § 523(a)(8)(A)(i).
- The bankruptcy court relied on loan-document labels and undisputed facts to find the loan educational, but rested TERI's funding role on limited evidence (TERI as the address for applications and alleged facility costs).
- The district panel affirmed the educational-loan characterization but reversed and remanded as the record did not support the inference that TERI funded or guaranteed the program.
Issues
| Issue | Plaintiff's Argument (Page) | Defendant's Argument (NCSLT) | Held |
|---|---|---|---|
| Whether the loan is an "educational loan" under § 523(a)(8) | Loan is a routine consumer/ commercial loan despite educational labels | Loan purpose and program indicia make it an educational loan | Loan is an "educational loan" (affirmed) |
| Whether TERI "funded" the loan program for § 523(a)(8)(A)(i) purposes | TERI's mere role as recipient/address and minimal administrative involvement does not equal funding | TERI's role (addressing applications, alleged facility spending, and asserted guarantee) shows it played a meaningful part | Reverse and remand: record insufficient to support inference TERI funded or guaranteed the program |
| Proper inference-drawing at summary judgment with cross-motions | Inferences should favor Debtor as non-movant on each respective motion | Bankruptcy court permissibly inferred funding based on available evidence | Court erred by drawing the funding inference for the movant without sufficient evidence |
| Whether guarantee evidence (affidavit) can be relied on | Debtor challenged the affidavit statement that TERI guaranteed the loan | NCSLT offered affidavit stating TERI guaranteed the loan | Bankruptcy court declined to decide guarantee issue; appellate court remanded for factual determination |
Key Cases Cited
- Educational Credit Mgmt. Corp. v. Jesperson, 571 F.3d 775 (8th Cir.) (standard: nondischargeability review de novo)
- In re Murphy, 282 F.3d 868 (5th Cir.) (use purpose test to determine if loan is "educational")
- In re Busson-Sokolik, 635 F.3d 261 (7th Cir.) (factors showing a loan is educational include student status, program eligibility, and school account disbursement)
- In re Merchant, 958 F.2d 738 (6th Cir.) (nonprofit commitments such as purchase/guarantee of loans can constitute meaningful contribution)
- Foster v. Johns-Manville Sales Corp., 787 F.2d 390 (8th Cir.) (summary judgment inferences must be drawn in favor of the non-movant)