The first section of this Bankruptcy Law Letter examines the questions surrounding the undefined term “educational benefit” in 11 U.S.C. §523(a)(8)(A)(ii), which makes private student loans, which do not meet the IRS definition of being a “qualified educational loan”, nondischargeable. These private loans can include bar review courses, loans for attendance at unacredited schools, loans for school or test preparation and ad hoc borrowing for that somehow relates to education.
The article examines the broad view of §523(a)(8)(A)(ii), which basically conflates “educational benefit” with any and all private loans. In contrast, the recently surgent line of cases take a narrower view of §523(a)(8)(A)(ii), finding that the phrase “an obligation to repay funds” indicates a clear difference from the more general term “loan” which is used elsewhere in §523(a)(8). Further, the phrase “educational benefit” should, under the canon of statutory interpretation noscitur a sociis (which is Latin for “known by its associates”), be interpreted in relation to the other phrases in §523(a)(8)(A)(ii), namely “scholarship” and “stipend”. Accordingly, §523(a)(8)(A)(ii) should “encompass military ROTC programs, National Health Service Corps Scholarships, and similar grants.”
The second section, examines the certification of Crocker v. Navient Solutions, L.L.C. , 585 B.R. 830, 832 (Bankr. S.D. Tex. 2018), as a nationwide class action for alleged violations of the discharge injunction for collection of private student loans.
The class certification in Crocker is likely in danger following the Supreme Court’s ruling in Taggart as Navient certainly will assert, with a fair likelihood of success, that any actions is a “fair ground of doubt” as to whether the private student loans were discharged.
For a copy of the article for educational use, please see: