Student Loan Discharge Upheld Under Clear-Error Standard

For many graduates, the weight of student loan debt can be overwhelming, particularly in a weak job market. However, for at least one, that burden has been reduced just a bit by virtue of a bankruptcy discharge. In a recent decision, the U.S. Court of Appeals for the Ninth Circuit reversed an Oregon district court judgment in Hedlund v. Educational Resources Institute, No. 12-35258, D.C. No. 6:11- cv-6281-AA, finding that court's de novo review of a Section 523(a)(8) proceeding to be improper and holding that the bankruptcy court's good-faith finding should be reviewed solely for clear error. In its opinion, the Ninth Circuit held that the bankruptcy court's review of the evidence, and its finding that the student loan debtor had made good-faith efforts to repay his loans, was not clearly erroneous.