## Facts

- Jonathon R. Gerhardt, a professional cellist, incurred over $77,000 in government-insured student loans for undergraduate and graduate music studies.
- He worked as principal cellist for the Louisiana Philharmonic Orchestra, earning about $1,680.47 per month, and received unemployment benefits during the off-season.
- His monthly expenses were about $1,829.39 and included discretionary items such as internet service and a gym membership.
- He was in good health and had no dependents.
- Before defaulting, he repaid $755 on the loans.
- After filing for Chapter 7 bankruptcy, he brought an adversary proceeding seeking discharge of the student loans under 11 U.S.C. § 523(a)(8) based on “undue hardship.”

## Issues

1. Whether a determination of “undue hardship” under 11 U.S.C. § 523(a)(8) is reviewed de novo as a legal conclusion or for clear error as a factual finding.
2. Whether Gerhardt proved “undue hardship” sufficient to discharge his student loan debt under § 523(a)(8).

## Decision

- The Fifth Circuit affirmed the district court’s judgment reversing the bankruptcy court.
- The court held that dischargeability based on “undue hardship” is reviewed de novo.
- The court adopted the Brunner test as the governing standard for “undue hardship” in the Fifth Circuit.
- Applying Brunner, the court held Gerhardt did not establish undue hardship and his student loans were nondischargeable.

## Legal Principles

- Student loans are excepted from discharge under 11 U.S.C. § 523(a)(8) unless the debtor proves “undue hardship.”
- The legal determination of dischargeability for “undue hardship,” based on the bankruptcy court’s findings, is reviewed de novo.
- Under the Brunner test, the debtor must prove:
  - inability to maintain a minimal standard of living if forced to repay;
  - additional circumstances showing the inability to pay is likely to persist for a significant portion of the repayment period; and
  - good faith efforts to repay.
- “Additional circumstances” require more than present financial strain; the debtor must show a long-term inability to repay for reasons largely beyond the debtor’s control.
- Limited repayment history and failure to pursue available repayment alternatives may weigh against a finding of good faith.

## Conclusion

The Fifth Circuit adopted the Brunner framework for § 523(a)(8) and held that a healthy, employed debtor with no dependents and minimal repayment history did not show long-term, externally caused inability to repay; the student loans therefore remained nondischargeable.


In re Gerhardt, 348 F.3d 89 (5th Cir. 2003)