PETER McNIFF, United States Bankruptcy Judge.
This case came before the court for trial on September 13, 1994, on the Complaint of the debtor, Cheryl Anne Hjelmstad, to determine that the student loan obligation she owes to the defendants is discharged pursuant to 11 U.S.C. § 523(a)(8)(B). Having considered the evidence presented, the arguments of the parties, and the relevant law, and for the reasons stated herein, the court finds that the debt is discharged.
Jurisdiction
The court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 157(a) 1334. This case is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(I).
Issue
The issue is whether the student loan obligation should be discharged because repayment will constitute an undue hardship on the debtor and her dependents.
Findings of Fact
The facts are not disputed. The parties dispute whether the debtor's circumstances sufficiently satisfy the statutory requirement of undue hardship for purposes of dischargeability.
The loan in question represents a consolidation of three (3) student loans owed to the Wyoming Student Loan Corporation, executed January 25, 1992. The consolidated loan was in the principal amount of $16,231.67. This note was guaranteed by the United Student Aid Funds, Inc. (USAF) and, under the terms of that guarantee, the note was assigned to USAF by the Wyoming Student Loan corporation. The unpaid principal balance and interest owing at the time of trial was $20,141.73. Interest accrues at the rate of $4.25 per day.
Hjelmstad attended Casper College and the University of Wyoming from 1988 to 1991. She pursued, but did not receive, a degree in wildlife management. After returning to Casper, she consolidated her student loans and made her payments of $172 per month. At that time Hjelmstad was married, but her decision to quit school was partly influenced by her marital difficulties.
In 1992 Hjelmstad was divorced, her income declined, and she stopped making payments on the student loan. She has custody of her two (2) daughters, now in the first and sixth grades. The eldest, Jennifer, has emotional problems for which Hjelmstad hopes to afford counseling. Also, because of Jennifer's situation, both daughters require day care before and after school.
Hjelmstad is employed at the Hilltop National Bank in the Commercial Loan Department. She is qualified to perform secretarial and clerical duties. Her net income is $900.93 per month. She also receives $300 per month from her former husband for child support, except for two (2) months in the summer when he pays $150 per month. Mr. Hjelmstad is not paying his court ordered obligation of one-half (1/2) the children's health care expenses.
Hjelmstad's monthly expenses total $1,298.12 and clearly exceed her income. She testified that in order to meet the excess expenses she must discontinue her $47 contribution to the bank's 401k plan.
Hjelmstad's expenses include a $50 per month payment to her parents on a personal loan. When repaid in February she hopes to use the money for her daughter's counseling.
The USAF argued that Hjelmstad's car payment of $104 per month (on a 1987 Toyota) will soon end, providing her with discretionary funds. However, Hjelmstad testified that she has no margin in her budget and can use that money just to cover necessities or an emergency. Her budget is tight and not at all extravagant.
Hjelmstad has had four (4) raises at the bank and expects a yearly raise hereafter. She considers her employment secure, but the possibility of advancement into a higher paying position is unlikely because she does not have a college degree. The evidence demonstrates that Hjelmstad's income qualifies her for the federal food stamp program under its eligibility standards for a family of three (3).
Conclusions
Hjelmstad has the burden of proving by a preponderance of the evidence that this debt should be discharged. In re D'Ettore, 106 B.R. 715 (Bankr.M.D.Fla. 1989); Grogan v. Garner, 498 U.S. 279, 291 (1991). Because the loan first became due less than seven (7) years before Hjelmstad filed her voluntary petition under chapter 7, it is not discharged under § 523(a)(2)(A). Therefore, Hjelmstad must demonstrate that repayment is an undue hardship and that the debt should be discharged under the provisions of § 523(a)(2)(B) which provide:
(a) A discharge under section 727 . . . does not discharge an individual debtor from any debt — . . .
(8) for an education . . . loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution . . . unless
(B) excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents. . .
Congress did not define undue hardship for purposes of § 523. Thus, the bankruptcy courts have struggled to find standards which can be uniformly applied to these cases. A factual examination of each individual debtor's current and future circumstances is required. Andrews v. South Dakota Student Loan Assistance Corp., 661 F.2d 702 (8th Cir. 1981). Although a present inability to pay the loan is a factor, the debtor must also demonstrate that future payments cannot be made. In re Boston, 3. 19 B.R. 162, 164 (Bankr.W.D.Ark. 1990). Concerning the future inability to pay, some courts have required that the debtor demonstrate a certainty of hopelessness, a requirement most recently endorsed by the court in In re Mathews, 166 B.R. 940, 945 (Bankr.D.Kan. 1994).
In Mathews, the court discussed at length the more commonly applied tests, and adopted the reasoning and factors of In re Bruner, 46 B.R. 752 (S.D.N.Y. 1985), aff'd 831 F.2d 395 (2d Cir. 1987). The Bruner test requires proof of: 1) the debtor's inability to maintain a minimal standard of living if required to repay the loan; 2) additional circumstances indicating the current financial situation is likely to continue; and 3) the debtor's good faith effort to repay the loan. Id., 831 F.2d at 396.
These standards are reasonable in light of the statutory language and legislative history. However, other courts have rejected application of any specific test, preferring instead a fact sensitive case-by-case approach. In re Law, 159 B.R. 287, 292 (Bankr.D.S.D. 1993). This less rigid approach considers the totality of the circumstances, allowing the court to apply its discretion while reviewing all factors involved in the case. In re Johnson, 121 B.R. 91, 93 (Bankr.N.D.Okla. 1990).
Whatever approach a court takes, § 523(a)(2)(B) is to be construed narrowly. In re Law, 159 B.R. at 293. And, because all the various approaches require a review of similar factors, even application of a specific test is generally a review of the case as a whole. Id. at 292. In other words, the tests, standards and factors overlap.
Considering all the evidence in this case, the court concludes that Hjelmstad is not in that category of persons Congress intended to prevent from discharging student loans. She is not earning a large salary, living extravagantly or irresponsibly, or avoiding employment. Rather, she has clearly demonstrated that her current income is insufficient to properly support her family and repay over $20,000 to the defendant. She has also shown that a significant improvement in her situation will not occur for the foreseeable future. Hjelmstad is before the court in good faith and did make a good faith effort to repay the loans before her circumstances changed. Her motivation goes beyond discharging this debt. The court is convinced that it is equitable to discharge the obligation and to not do so would be an undue hardship.
Accordingly, the court holds that the obligation of Cheryl Anne Hjelmstad to the United Student Aid Funds, Inc., is discharged because repayment will be an undue hardship on her and her dependent children. The court will enter an appropriate judgment.