                           RECOMMENDED FOR FULL-TEXT PUBLICATION
                                Pursuant to Sixth Circuit Rule 206
                                       File Name: 05a0242p.06

                    UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT
                                     _________________


                                                   X
                                         Debtor. -
 In re: ROSE A. TIRCH,

 __________________________________________ -
                                                    -
                                                    -
                                                          No. 04-3125

                                                    ,
 ROSE A. TIRCH,                                      >
                              Plaintiff-Appellee, -
                                                    -
                                                    -
                                                    -
           v.

                                                    -
                                                    -
 PENNSYLVANIA HIGHER EDUCATION ASSISTANCE
                                                    -
 AGENCY,
                            Defendant-Appellant. -
                                                    -
                                                    -
                                                   N
                       On Appeal from the Bankruptcy Appellate
                              Panel of the Sixth Circuit.
                 No. 00-54083—Barbara J. Sellers, Bankruptcy Judge;
                 William T. Bodoh, Bankruptcy Appellate Panel Judge.
                            Argued and Submitted: February 1, 2005
                                Decided and Filed: June 3, 2005
             Before: SILER, BATCHELDER, and DAUGHTREY, Circuit Judges.
                                       _________________
                                           COUNSEL
ARGUED: Donald J. Rafferty, COHEN, TODD, KITE & STANFORD, Cincinnati, Ohio, for
Appellant. ON BRIEF: Donald J. Rafferty, COHEN, TODD, KITE & STANFORD, Cincinnati,
Ohio, for Appellant. D. William Davis, DAVIS LAW OFFICE, Bridgeport, Ohio, for Appellee.
                                       _________________
                                           OPINION
                                       _________________
        ALICE M. BATCHELDER, Circuit Judge. Defendant-Appellant Pennsylvania Higher
Education Assistance Agency (“PHEAA”) appeals the Bankruptcy Appellate Panel’s (“BAP”) order
affirming the bankruptcy court’s order granting partial discharge of Plaintiff-Appellee Rose Tirch’s
student loan debt. Because the record does not support the bankruptcy court’s findings that Tirch’s
ailments preclude her return to work and are likely to persist for a significant portion of the


                                                 1
No. 04-3125           In re Tirch                                                             Page 2


repayment period, or that she made a good faith effort to pay back her student loans, we will
REVERSE.
        Tirch, a single female in her mid-40s, holds a B.A. in Counseling, which she received in the
mid-1980's and a Master’s Degree in Counseling, which she received in 1998. Tirch financed her
education through a total of 17 loans provided by PHEAA and owed an aggregate balance of
$84,604.65 as of June 19, 2001, with interest accruing at a rate of $558.08 per month. As of the
filing of this appeal, Tirch, who first defaulted on her loans on October 24, 2000, had made
$3,072.75 in payments on the loans and had arranged for her alma mater, Franciscan University of
Steubenville, to make a charitable payment of $1,850.77.
       After receiving her Master’s Degree, Tirch worked in various counseling positions and
earned about $27,000 in 1999, $28,500 in 2000, and $27,500 in 2001. Claiming various long-term
medical and emotional problems, including attention deficit disorder, chronic anxiety and
depression, as well as colorectal surgery in December 2001, from which she has had a slow
recovery, Tirch stopped working at the end of 2001. Apparently as a result of anaesthetics
administered during the surgery, Tirch lost her sense of taste, which has affected her appetite and
which she contends has made a return to work impossible. For a period of 24 months, Tirch
received $1,400 per month in disability benefits based on her allegedly debilitating mental condition.
         Sometime in 2000—Tirch does not provide us with the date—Tirch filed for protection under
Chapter 7 of the Bankruptcy Code. In August of 2000, some sixteen months before she stopped
working, Tirch filed an adversary proceeding against PHEAA in her Chapter 7 case, seeking a
discharge of her student loan debt for “undue hardship” pursuant to 11 U.S.C. § 523(a)(8). The
bankruptcy court held a trial on August 16, 2002, at which Tirch was the only witness. During the
trial, Tirch described her medical and emotional problems and produced unauthenticated records
from her treating doctors, which the bankruptcy court admitted solely as evidence that she had
sought medical help, but not as evidence of the underlying medical diagnoses. She also testified that
she did not apply to participate in the William D. Ford Federal Direct Consolidation Program. This
program includes an Income Contingent Repayment (“ICR”) plan whereby the lenders and loan
guarantors are repaid by the Program, and the borrower becomes obligated to repay the Program a
reduced amount for a period of up to 25 years, after which time any unpaid portion is discharged.
Tirch admitted that she was aware of the program’s existence but elected not to avail herself of its
benefits.
        Applying the three-part test announced by the Second Circuit in Brunner v. New York State
Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987), the bankruptcy court granted Tirch
a partial discharge of her student loan debt, holding that requiring Tirch to pay her student loans in
an amount in excess of $200.00 per month once she returns to work and earns a salary of at least
$20,000 per year would impose an undue hardship. The bankruptcy court’s order allows Tirch to
discontinue payments at age 65 in any eventuality. The BAP affirmed the bankruptcy court’s order.
PHEAA timely appealed.
        We focus our review of cases appealed from the BAP on the bankruptcy court’s decision,
examining findings of fact for clear error, and conclusions of law de novo. In re Palmer, 219 F.3d
580, 583 (6th Cir. 2000). Whether the repayment of student loans would impose an undue hardship
on the debtor is a question of law that we review de novo. In re Cheesman, 25 F.3d 356, 359 (6th
Cir. 1994).
        The Bankruptcy Code provides for the complete discharge of educational loans whose
repayment would impose an “undue hardship” on the debtor. 11 U.S.C. § 523(a)(8). Despite the
fact that 11 U.S.C. § 523(a)(8) makes no mention of partial discharges, we have held that the
bankruptcy court may grant a partial discharge of such a debt pursuant to the equitable powers
No. 04-3125           In re Tirch                                                                   Page 3


enumerated in 11 U.S.C. § 105(a). In re Miller, 377 F.3d 616, 620-21 (6th Cir. 2004) (citing
Hornsby v. Tenn. Student Assistance Corp., 144 F.3d 433, 439-40 (6th Cir. 1998)); see also
DeMatteis v. Case Western Reserve University, 97 Fed.Appx. 6, 9 (6th Cir. March 8, 2004)
(unpublished). Miller held that “the requirement of undue hardship must always apply to the
discharge of student loans in bankruptcy—regardless of whether a court is discharging a debtor’s
student loans in full or only partially.” Id. at 622.
        Because “undue hardship” is not defined by the Bankruptcy Code, this circuit has
traditionally looked to the Brunner test for guidance. See, e.g., In re Cheesman, 25 F.3d at 359
(applying the Brunner test to plaintiff’s request for a total discharge of student loans); Miller, 377
F.3d at 623 (analyzing the bankruptcy court’s grant of a partial discharge of student loans under
Brunner). Very recently, however, we explicitly adopted the Brunner test. In re Oyler, 397 F.3d
382, 385 (6th Cir. 2005). Accordingly, in this circuit, a debtor seeking a partial discharge of student
loans due to “undue hardship” must make a three-part showing:
       (1) that the debtor cannot maintain, based on current income and expenses, a
       “minimal” standard of living for herself and her dependents if forced to repay the
       loans;
       (2) that additional circumstances exist indicating that this state of affairs is likely to
       persist for a significant portion of the repayment period of the student loans; and
       (3) that the debtor has made good faith efforts to repay the loans.
Brunner, 831 F.2d at 396. Because PHEAA concedes that under her current circumstances, Tirch
cannot maintain a minimal standard of living if forced to repay the loans, this case turns on the
second and third prongs of the Brunner test. After examining the record of the proceedings in the
bankruptcy court, we conclude that Tirch failed to carry her burden on either of these prongs.
       To demonstrate that the debtor’s current “state of affairs is likely to persist for a significant
portion of the repayment period of the student loans,” as required by Brunner’s second prong, the
debtor must precisely identify her problems and explain how her condition would impair her ability
to work in the future. In re Brightful, 267 F.3d 324, 330 (3d Cir. 2001); In re Paolini, No. 95-3516,
1997 WL 476515 at * 5 (6th Cir. Aug. 19, 1997). The dischargeability of loans should be based
upon “a certainty of hopelessness, not merely a present inability to fulfill financial commitment.”
Oyler, 397 F.3d at 386 (quoting In re Roberson, 999 F.3d 1132, 1136 (7th Cir. 1993)). Tirch has
not made this showing.
        Tirch testified that she continues to experience problems arising from her rectal surgery,
including irregularity and loss of taste, but she did not provide evidence that these physical problems
would preclude her from working. Instead, she explained that “[a]t this point I can’t help somebody
else when I can’t help myself and no one can help me. So I don’t feel I can be in the counseling
field or social work field at this time and I’m not even functioning in my own home.” When
pressed, she explained further,
       If my taste returns, which is my biggest difficulty that I’m having, which people may
       see as simple, but it’s not . . . . So I don’t believe I can return to work any time soon.
       If I don’t have the - - the return of my taste, I don’t know how I’m going to cope long
       term to be able to get back to work in any capacity, I don’t know.
       Neither has Tirch provided evidence sufficient to demonstrate that her psychological
conditions preclude her return to work. Her assertion that “I went through post-traumatic stress
when I went to work at the State of West Virginia as a social worker” is certainly not sufficient.
Tirch should have sought employment in another field when the stress of clinical social work
became debilitating. See Paolini, 1997 WL 476515 at *6 (“while [the debtor’s] struggle with
No. 04-3125           In re Tirch                                                                Page 4


[obsessive compulsive disorder] makes her unsuited for work in the stressful environment of a large
law firm, there are a plethora of legal jobs [the debtor] has not yet explored”); see also In re Hafner,
303 B.R. 351, 356 (Bankr. S.D. Ohio 2003). The remainder of Tirch’s testimony relating to her
claim that she is unable to work is simply a recitation of incidents of stress occurring over a period
of several years, unsupported by competent medical or psychological evidence. We have no
occasion to delve into the BAP’s holding that the bankruptcy court’s assessment of the debtor’s
testimony regarding her mental and emotional health is sufficiently reliable to support the
bankruptcy court’s findings in that regard, without the necessity of expert corroboration, because
the bankruptcy court made no such assessment. Indeed, the bankruptcy court provided no factual
basis whatsoever for its bald conclusion that Tirch had met all three prongs of the Brunner test.
        Nor did Tirch provide evidence that these problems would “persist for a significant portion
of the repayment period of the student loans.” Brunner, 831 F.2d at 396. When asked if she would
be able to return to work, Tirch responded,
       Not at this time. And I don’t know when this would be. It could be a year, it could
       be two years. I don’t know how I’m going to cope if I have complete [loss of taste]
       forever. I really at this time can’t and I know it’s - it could be six months to a year
       if I don’t - - if [my sense of taste] returns, I could.
        Nothing in Tirch’s statements and nothing in the record as a whole provides any “certainty
of hopelessness,” Oyler, 397 F.3d at 386, or any basis for concluding that Tirch’s current condition
will persist for any appreciable period. Indeed, we are hard-pressed to discern, either from any of
these statements or from the entire record, how her condition prevents her from working now, let
alone in the future.
         The facts of Tirch’s case are similar to those in In re Burton, 117 B.R. 167 (Bankr. W.D.
Penn. 1990), in which a 33-year-old debtor with a four-year college degree testified that he suffered
from Epstein-Barr Syndrome (the virus that causes, among other things, infectious mononucleosis),
a severe bowel disorder, depression, and a lack of concentration, and presented unauthenticated
letters from a doctor, which purported to corroborate his testimony. The court held that the debtor
did not demonstrate undue hardship because he “failed to show what the long-term deleterious
effects of the disease are; that he can be expected to suffer those effects during the next ten (10)
years or so; or, that this condition will prevent him from being gainfully employed during that time.”
Id. at 171. Like the debtor in Burton, Tirch has failed to prove that her ailments preclude her return
to work and will persist for a significant portion of the repayment period.
        Tirch has also failed to show that she made a good faith effort to repay the loans, as required
by the third prong of the Brunner test. We begin our good faith analysis with Tirch’s decision not
to avail herself of the William D. Ford ICR. The bankruptcy court in In re Korhonen, 296 B.R. 492,
496 (Bankr. D. Minn. 2003), explained the mechanics of the ICR:
       The Income Contingent Repayment Program permits a student loan debtor to pay
       twenty percent of the difference between his adjusted gross income and the poverty
       level for his family size, or the amount the debtor would pay if the debt were repaid
       in twelve years, whichever is less. Under the program, the borrower’s monthly
       repayment amount is adjusted each year to reflect any changes in these factors. The
       borrower’s repayments may also be adjusted during the year based on special
       circumstances. See 34 C.F.R. § 685.209(c)(3). At the end of the twenty five year
       payment period, any remaining loan balance would be cancelled by the Secretary of
       Education. However, the amount discharged would be considered taxable income.
No. 04-3125          In re Tirch                                                             Page 5


        While not a per se indication of a lack of good faith, see Educational Credit Management
Corp. v. Polleys, 356 F.3d 1302, 1311 (10th Cir. 2004), Tirch’s decision not to take advantage of
the ICR is probative of her intent to repay her loans. See Brunner, 831 F.2d at 397. In cases
involving a partial discharge of student loans, “it is a difficult, although not necessarily an
insurmountable burden for a debtor who is offered, but then declines the government’s income
contingent repayment program, to come to this Court and seek an equitable adjustment of their
student loan debt.” In re Swinney, 266 B.R. 800, 806-07 (Bankr. N.D. Ohio 2001) (citing In re
Ritchie, 254 B.R. 913, 923 (Bankr. D. Idaho 2000) and In re Douglass, 237 B.R. 652, 657 (Bankr.
N.D. Ohio 1999)); see also In re Storey, 312 B.R. 867, 875 (Bankr. N.D. Ohio 2004); In re Alderete,
289 B.R. 410, 420 (Bankr. D.N.M. 2002).
        The BAP determined that Tirch’s failure to avail herself of the ICR was not probative of her
good faith because her payments under the plan would be $597.34 per month, and the bankruptcy
court had found that it would work an undue hardship on Tirch to require her to pay more than
$200.00 per month once she attained an annual income level of $20,000. According to the BAP, the
ICR therefore provided no effective relief. The BAP, however, misapplied the formula that
calculates a debtor’s payments under the ICR. As we will explain, Tirch would have had to pay only
$183.66 per month had she taken advantage of the ICR.
       Under the ICR, the annual amount payable by the student is the lesser of,
       (i) The amount the borrower would repay annually over 12 years using standard
       amortization multiplied by an income percentage factor that corresponds to the
       borrower’s adjusted gross income (AGI) as shown in the income percentage factor
       table in a notice published annually by the Secretary in the FEDERAL REGISTER;
       or
       (ii) 20 percent of discretionary income.
34 C.F.R. § 685.209(a)(2). Under subsection (a)(2)(i), Tirch would have to pay $597.34 per month
(while there is a discrepancy in the BAP’s opinion over whether the monthly total under subsection
(a)(2)(i) is $597.37 or $597.34, this discrepancy makes no difference in the analysis). In Tirch’s
case, however, her payments under subsection (a)(2)(ii), twenty percent of her discretionary income,
would be far less than $597.34 per month. According to 34 C.F.R. § 685.209(a)(3), a borrower’s
discretionary income is her AGI minus the Health and Human Services Poverty Guideline Amount.
The BAP calculated Tirch’s discretionary income as $11,020 by subtracting $8,980 (the HHS
poverty guideline for a single person living in the continental 48 states) from $20,000 (Tirch’s
estimated AGI). Next, the BAP divided $11,020 by 12 months and concluded that the ICR monthly
payment under subsection (a)(2)(ii) would be $918.33 per month. However, the BAP did not
consider that 34 C.F.R. § 685.209(a)(2)(ii) requires the debtor to pay only 20% of her discretionary
income. Twenty percent of Tirch’s discretionary income of $11,020.00 equals $2,204.00. Tirch’s
resulting monthly payment under the ICR is $183.66, which is even less than the $200 monthly
payment that the bankruptcy court ordered and the BAP upheld.
         Because Tirch declined to take advantage of an ICR that would have been advantageous, she
failed to sustain the heavy burden of proving that she made a good faith effort to repay her loans.
Since the mid-1980's (when she received a B.A. financed by PHEAA loans), Tirch had paid only
$4,093.52 (including Franciscan University’s contribution) on a series of loans which reached an
aggregate balance of $84,604.65 by June of 2001. Despite receiving her Master’s Degree in 1998
(also financed by PHEAA loans) and making roughly $27,000 in 1999, $28,500 in 2000 and $27,500
in 2001, she defaulted on her loans by October of 2001. When viewed in the context of her
demonstrable earned-income potential, the $4,093.52 that Tirch paid on her student loans in the 20
years since she received her B.A. is meager. Tirch has failed to satisfy the third prong of the
Brunner test.
No. 04-3125          In re Tirch                                                           Page 6


        Because Tirch has failed to demonstrate that her circumstances meet the Brunner standard
to qualify for an “undue hardship” partial discharge of her student loans, we REVERSE the decision
of the BAP affirming the judgment of the bankruptcy court.
