                                                                  FILED
                                                                  MAR 27 2015
 1                                                          SUSAN M. SPRAUL, CLERK
                                                                 U.S. BKCY. APP. PANEL
                                                                 OF THE NINTH CIRCUIT
 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                             )   BAP No.   NC-14-1336-PaJuTa
                                        )
 6   TARRA NICHOLE CHRISTOFF,           )   Bk. No.   13-10808
                                        )
 7                  Debtor.             )   Adv. No. 13-3186
     ___________________________________)
 8                                      )
                                        )
 9   INSTITUTE OF IMAGINAL STUDIES      )
     dba MERIDIAN UNIVERSITY,           )
10                                      )
                                        )
11                  Appellant,          )
                                        )
12   v.                                 )   O P I N I O N
                                        )
13                                      )
     TARRA NICHOLE CHRISTOFF,           )
14                                      )
                                        )
15                  Appellee.           )
     ___________________________________)
16
17                  Argued and Submitted on February 19, 2015
                          at San Francisco, California
18
                             Filed - March 27, 2015
19                                ____________
20               Appeal from the United States Bankruptcy Court
                     for the Northern District of California
21
              Hon. Dennis Montali, U.S. Bankruptcy Judge, Presiding
22
23
     Appearances:     Scott D. Schwartz of Rust, Armenis & Schwartz, P.C.
24                    argued for Appellant Institute of Imaginal Studies
                      d/b/a Meridian University; Lindsay Torgerson of
25                    Wine Country Family Law & Bankruptcy Office argued
                      for Appellee Tarra Nichole Christoff.
26
27
28   Before: PAPPAS, JURY, and TAYLOR, Bankruptcy Judges.
 1   PAPPAS, Bankruptcy Judge:
 2
 3          This appeal raises an important issue of first impression
 4   concerning the scope of the exception to discharge for student
 5   debts in bankruptcy.      Creditor Institute of Imaginal Studies d/b/a
 6   Meridian University (“Meridian”) appeals the summary judgment of
 7   the bankruptcy court determining that the debt owed to Meridian by
 8   chapter 71 debtor Tarra Nichole Christoff (“Debtor”) was not
 9   excepted from discharge pursuant to § 523(a)(8)(A)(ii).      Based
10   upon the plain language of the Bankruptcy Code, we AFFIRM.
11                                    I.   FACTS2
12          A.     Relationship of the Parties.
13          Meridian is a for-profit California corporation which
14   operates a private university licensed under California’s Private
15   Post Secondary Education Act of 2009, Cal. Educ. Code § 94800, et
16   seq.       If a graduate of Meridian fulfills other post-graduate
17   requirements, the graduate may obtain a license from California to
18   practice as an independent, unsupervised psychologist.
19          Debtor applied for admission to Meridian in 2002.     Meridian
20   agreed to admit Debtor and offered her $6,000 in financial aid to
21   pay a portion of the tuition for that school year.      Under this
22   arrangement, Debtor did not receive any actual funds from
23
24        1
             Unless otherwise indicated, all chapter, section and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
25   to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
     “Civil Rule” references are to the Federal Rules of Civil
26   Procedure 1-86.
27          2
             This recitation of the undisputed facts is taken primarily
     from the bankruptcy court’s decision, which neither of the parties
28   has challenged.

                                           -2-
 1   Meridian, but instead she received a tuition credit.   Debtor
 2   signed an enrollment agreement acknowledging Meridian’s offer to
 3   “finance” $6,000 of the tuition, and she signed a promissory note
 4   in favor of Meridian evidencing her obligation.   The promissory
 5   note provided that the debt for the tuition credit was to be paid
 6   by Debtor in installments of $350 per month after Debtor completed
 7   her course work or withdrew from Meridian.   Interest accrued on
 8   the unpaid balance of the note at nine percent per annum,
 9   compounded monthly.
10        In 2003, Debtor submitted a similar application, and Meridian
11   granted her a financial aid award of $5,000 for that school year.
12   As before, Debtor signed a promissory note for $5,000.   Again,
13   Debtor did not receive any funds but instead received a tuition
14   credit.   The promissory note contained payment terms identical to
15   those in the prior note.
16        Debtor completed her course work at Meridian, and Debtor’s
17   note payments began in October 2005.   After making several
18   payments on the notes, in 2009, Debtor sought a deferral of her
19   payments for a period of one year.    Meridian granted the
20   extension.   Also in 2009, Debtor withdrew from Meridian without
21   completing her dissertation, a requirement for obtaining her
22   degree.
23        After the extension expired, Debtor did not pay the amounts
24   due under the two promissory notes.    Thereafter, Meridian
25   unsuccessfully attempted to collect the balance due from Debtor.
26   Eventually, Meridian and Debtor agreed to submit Meridian’s claims
27   to arbitration under a provision in the enrollment agreement.     In
28   July 2012, an arbitrator ordered Debtor to pay Meridian the unpaid

                                     -3-
 1   balance due on the promissory notes, $5,950, plus accrued
 2   interest.
 3           B.     The Bankruptcy Case and Adversary Proceeding.
 4           Debtor filed a chapter 7 bankruptcy petition on August 19,
 5   2013.       Debtor listed Meridian in schedule F as an unsecured,
 6   nonpriority creditor.      Meridian commenced an adversary proceeding
 7   against Debtor seeking a determination by the bankruptcy court
 8   that the debt owed by Debtor to Meridian was excepted from
 9   discharge pursuant to § 523(a)(8).
10           On April 30, 2014, Meridian filed a motion for summary
11   judgment.      In its motion, Meridian conceded that Debtor’s debt did
12   not qualify for an exception to discharge under either
13   § 523(a)(8)(A)(i) or (a)(8)(B).3      However, it argued that the debt
14   was excepted from discharge under § 523(a)(8)(A)(ii).      Debtor
15   disputed that this Code provision applied to her debt to
16   Meridian.4      The parties appeared at a motion hearing on May 30,
17   2014, presented their arguments, and the bankruptcy court took the
18   issues under advisement.
19           On June 11, 2014, the bankruptcy court entered a Memorandum
20   Decision in which it held that Debtor’s debt to Meridian did not
21
22
             3
             We agree that Meridian cannot take advantage of these
23   discharge exceptions because it was neither a governmental unit
     nor a nonprofit institution as required for an exception under
24   § 523(a)(8)(A)(i), nor was the debt in this case a “qualified
     education loan” as defined by the Internal Revenue Code, a
25   condition for an exception to discharge under § 523(a)(8)(B).
26           4
             The parties agreed that if the bankruptcy court determined
     that the Meridian debt qualified for an exception to discharge
27   under § 523(a)(8)(A)(ii), Debtor would be allowed to amend her
     answer and plead that she could not repay the debt without an
28   “undue hardship”.

                                         -4-
 1   qualify for an exception to discharge under § 523(a)(8)(A)(ii).
 2   Inst. of Imaginal Studies dba Meridian Univ. v. Christoff (In re
 3   Christoff), 510 B.R. 876, 884 (Bankr. N.D. Ca. 2014).    In making
 4   this ruling, the bankruptcy court noted that the question raised
 5   by the motion was an issue of first impression in the Ninth
 6   Circuit following enactment of the Bankruptcy Abuse Prevention and
 7   Consumer Protection Act of 2005 (BAPCPA).5    After a thorough
 8   review of amended § 523(a)(8) and the cases addressing the issue,
 9   the bankruptcy court concluded:
10                [b]ecause Debtor’s obligations under
                  applicable documents were to pay the amount
11                under the [p]romissory [n]otes, and thereafter
                  the arbitration award, but did not flow from
12                ‘funds received’ either by her as the student
                  or by Meridian from any other source, the debt
13                is not covered by [§ 523(a)(8)(A)(ii)] and is
                  therefore eligible for discharge in Debtor’s
14                discharge.
15   In re Christoff, 510 B.R. at 884.
16        Interpreting the “funds received” requirement in
17   § 523(a)(8)(A)(ii), the bankruptcy court explained that “Meridian
18   simply agreed to be paid the tuition later . . . [i]t did not
19   receive any funds, such as from a third party financing source.”
20   Id. at 879.    The bankruptcy court therefore concluded that, while
21   the transactions between Debtor and Meridian were clearly loans,
22   § 523(a)(8)(A)(ii) does not extend to loans but, instead, grants
23   an exception to discharge for “an obligation to repay funds
24   received.”    Id. at 879.   The bankruptcy court observed that BAPCPA
25   had amended the prior version of § 523(a)(8) and had created a
26   “newly separated [§ 523(a)(8)(A)(ii), which] refers to an
27
28        5
              Pub. L. No. 109-8, 119 Stat. 23.

                                       -5-
 1   ‘obligation to repay funds received as an educational benefit,
 2   scholarship[,] or stipend,’ without reference to educational loans
 3   or any other kind of loan.”          Id.
 4           Meridian filed a notice of appeal concerning the Memorandum
 5   Decision on June 26, 2014.          The bankruptcy court, on July 2, 2014,
 6   entered an order granting summary judgment in favor of Debtor and
 7   denying Meridian’s motion for summary judgment; it also entered a
 8   judgment incorporating these rulings.               On July 11, 2014, Meridian
 9   filed an amended notice of appeal to include the order and
10   judgment entered by the bankruptcy court.
11                                 II.    JURISDICTION
12           The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
13   and 157(b)(2)(I).    We have jurisdiction under 28 U.S.C. § 158.
14                                       III.    ISSUE
15           Whether the bankruptcy court erred in holding that the
16   Meridian debt was not excepted from discharge under
17   § 523(a)(8)(A)(ii) because it was not an obligation for “funds
18   received.”
19                           IV.    STANDARDS OF REVIEW
20           We review a bankruptcy court’s grant of summary judgment de
21   novo.    The President & Bd. of Ohio Univ. v. Hawkins (In re
22   Hawkins), 317 B.R. 104, 108 (9th Cir. BAP 2004), aff’d, 469 F.3d
23   1316 (9th Cir. 2006); Thorson v. Cal. Student Aid Comm’n (In re
24   Thorson), 195 B.R. 101, 103 (9th Cir. BAP 1996) (citing Jones v.
25   Union Pac. R.R. Co., 968 F.2d 937, 940 (9th Cir. 1992)).
26   According to Civil Rule 56, made applicable to adversary
27   proceedings in Rule 7056, summary judgment is appropriate if there
28   is a showing “that there is no genuine dispute as to any material

                                                -6-
 1   fact and the movant is entitled to judgment as a matter of law.”
 2   Civil Rule 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322
 3   (1986).   A trial court, in the exercise of its discretion, may
 4   grant a summary judgment for a nonmovant pursuant to Civil Rule
 5   56(f)(1).
 6        “We review de novo the bankruptcy court’s application of the
 7   legal standard in determining whether a student loan debt is
 8   dischargeable.”   Educ. Credit Mgmt. Corp. v. Jorgensen (In re
 9   Jorgensen), 479 B.R. 79, 85 (9th Cir. BAP 2012) (citing Rifino v.
10   United States (In re Rifino), 245 F.3d 1083, 1087 (9th Cir.
11   2001)).   “To the extent the bankruptcy court interpreted statutory
12   law, we review the issues of law de novo.”    In re Thorson, 195
13   B.R. at 103.
14                               V.   DISCUSSION
15        A.     Arguments of the Parties.
16        Meridian argues that the bankruptcy court erred when it
17   interpreted § 523(a)(8)(A)(ii) to require that actual funds be
18   received by a debtor in order for a debt to qualify for an
19   exception to discharge under that provision.   According to
20   Meridian, “funds received,” as that language is used in
21   § 523(a)(8)(A)(ii), is the equivalent to “loans” received by the
22   debtor, as described in the other provisions of § 523(a)(8).     To
23   support this argument, Meridian cites to McKay v. Ingleson, 558
24   F.3d 888 (9th Cir. 2009), and to Johnson v. Mo. Baptist Coll. (In
25   re Johnson), 218 B.R. 449 (8th Cir. BAP 1998), a decision cited
26   and relied upon by the Ninth Circuit in McKay.    Meridian argues
27   that the bankruptcy court erred in distinguishing these cases
28   because those decisions determined that a “loan” under § 523(a)(8)

                                       -7-
 1   required no funds to be transferred to a debtor.     Meridian argues
 2   that since the terms “loan” and “funds received” are synonymous as
 3   used in § 523(a)(8), McKay and In re Johnson control the outcome
 4   in this case.
 5        Debtor points to the difference in the language employed by
 6   Congress to delineate what types of student debts are excepted
 7   from discharge under § 523(a)(8).      While § 523(a)(8)(A)(i) and (B)
 8   indeed make “loans” nondischargeable in bankruptcy, absent undue
 9   hardship, § 523(a)(8)(A)(ii) applies to a different type of debt:
10   a debtor’s “obligation to repay funds received as an educational
11   benefit, scholarship, or stipend [.]”     Because Congress did not
12   refer to “loans” in this subsection of the Code, Debtor urges that
13   it was intended to apply to a distinctly different type of debt,
14   an obligation to repay the creditor for “funds received.”
15   Therefore, Debtor argues, it is inappropriate to borrow from the
16   logic of the cases construing the “loan” language used in the
17   other student debt exceptions to construe the meaning of “funds
18   received” in § 523(a)(8)(A)(ii).
19        We agree with Debtor.
20        B.   Statutory Interpretation and Exceptions to Discharge.
21        Any analysis of the Bankruptcy Code begins with the text of
22   the statute.    Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 69
23   (2011); Danielson v. Flores (In re Flores), 735 F.3d 855, 859 (9th
24   Cir. 2013) (en banc) (citing Miranda v. Anchondo, 684 F.3d 844,
25   849 (9th Cir. 2011).   “Furthermore, ‘the words of [the Code] must
26   be read in their context and with a view to their place in the
27   overall statutory scheme.’”   In re Flores, 735 F.3d at 859
28   (quoting Gale v. First Franklin Loan Servs., 701 F.3d 1240, 1244

                                      -8-
 1   (9th Cir. 2012)).   “If the statutory language is unambiguous and

 2   the statutory scheme is coherent and consistent, judicial inquiry

 3   must cease.”   Fireman’s Fund Ins. Co. v. Plant Insulation Co. (In

 4   re Plant Insulation Co.),     734 F.3d 900, 910 (9th Cir. 2013)

 5   (citations and internal quotation marks omitted).

 6        Courts must limit the provisions granting exceptions to

 7   discharge to those plainly expressed in § 523(a).    Bullock v.

 8   BankChampaign, N.A., 133 S. Ct. 1754, 1760 (2013) (noting the

 9   “long-standing principle that exceptions to discharge should be

10   confined to those plainly expressed”) (internal quotations marks

11   and citations omitted); Hawkins v. Franchise Tax Bd. of Cal., 769

12   F.3d 662, 666 (9th Cir. 2014) (reminding that “the Supreme Court

13   has interpreted exceptions to the broad presumption of discharge

14   narrowly”); Sachan v. Huh (In re Huh), 506 B.R. 257, 263 (9th Cir.

15   BAP 2014) (en banc) (stating “the exception to discharge

16   provisions of the Bankruptcy Code are interpreted strictly in

17   favor of debtors”); Benson v. Corbin (In re Corbin), 506 B.R. 287,

18   291 (Bankr. W.D. Wa. 2014) (observing, in a § 523(a)(8) case, that

19   “[c]ourts construe exceptions to discharge strictly against a

20   creditor and liberally in favor of the debtor”).

21        B.   The Pre-BAPCPA § 523(a)(8).

22        The student debt exception to discharge, embodied in

23   § 523(a)(8), has been amended several times over the years, most

24   recently by BAPCPA in 2005.

25        Prior to BAPCPA, § 523(a)(8) provided that a bankruptcy

26   discharge would not apply to a debt for:

27              an educational benefit overpayment or loan
                made, insured or guaranteed by a governmental
28              unit, or made under any program funded in

                                       -9-
 1             whole or in part by a governmental unit, or
               nonprofit institution, or for an obligation to
 2             repay funds received as an educational
               benefit, scholarship, or stipend, unless
 3             excepting such debt from discharge under this
               paragraph will impose an undue hardship on the
 4             debtor and the debtor’s dependents.
 5   In re Hawkins, 317 B.R. at 108 (quoting § 523(a)(8)).
 6        Interpreting this version of § 523(a)(8), the Panel stated,
 7        [g]enerally speaking, debts that are potentially
          nondischargeable under § 523(a)(8) fall into two
 8        categories: 1) debts for educational benefit
          overpayments or loans made, insured, or guaranteed by a
 9        governmental unit or nonprofit institution; or 2) debts
          for obligations to repay funds received as an
10        educational benefit, scholarship[,] or stipend.
11   Id. at 109 (citing Mehlman v. N.Y. City Bd. of Educ. (In re
12   Mehlman), 268 B.R. 379, 383 (Bankr. S.D.N.Y. 2001)).
13        In In re Hawkins, the Panel examined an agreement between the
14   debtor and Ohio University wherein the debtor agreed, in exchange
15   for admission to the University’s medical school, that when she
16   completed her studies she would practice medicine in Ohio for at
17   least five years after licensure.      317 B.R. at 107.    If she failed
18   to do this, the agreement provided that she would pay liquidated
19   damages to the University.    Id.    The debtor graduated but promptly
20   moved to a different state.    Id.    The University sued the debtor
21   in state court and obtained a money judgment for the liquidated
22   damages specified in the agreement.        Id.   The debtor filed for
23   chapter 7 relief, and the University sought a determination from
24   the bankruptcy court that the judgment debt was excepted from
25   discharge under § 523(a)(8).   Id. at 108.       Applying § 523(a)(8) to
26   these facts, the Panel addressed both categories of debt covered
27   by the discharge exception.    Id. at 110-11.
28        First, the Panel concluded that the agreement between the

                                         -10-
 1   debtor and the University was not an “educational loan” because
 2   “while an educational loan need not include an actual transfer of
 3   money . . . to [the d]ebtor, in order for it to fall within the
 4   definition of . . . § 523(a)(8), the loan instrument must
 5   sufficiently articulate definite repayment terms and the repayment
 6   obligation must reflect the value of the benefit actually received
 7   [by the debtor], rather than some other ill defined measure of
 8   damages or penalty.”   Id. at 110 (emphasis deleted).
 9        Next, the Panel considered whether the agreement created a
10   debt for “an obligation to repay funds received as an educational
11   benefit.”   Id. at 112.   The Panel quickly concluded that it did
12   not, “because the plain language of this prong of the statute
13   requires that a debtor receive actual funds in order to obtain a
14   nondischargeable educational benefit.”   Id. (citing Cazenovia
15   Coll. v. Renshaw (In re Renshaw), 229 B.R. 552, 555 n.5 (2d Cir.
16   BAP 1999), aff’d, 222 F.3d 82 (2d Cir. 2000)).    The University
17   appealed the BAP’s decision and the Ninth Circuit affirmed,
18   adopting the opinion of the BAP as its own.   See Ohio Univ. v.
19   Hawkins (In re Hawkins), 469 F.3d 1316, 1317 (9th Cir. 2006) (“We
20   adopt the opinion of the BAP, which is reported at 317 B.R. 104,
21   and affirm its judgment.”).
22        A few years later, the Ninth Circuit again addressed whether
23   an agreement between a student and a college constituted a “loan”
24   for purposes of the pre-BAPCPA version of § 523(a)(8).   In McKay
25   v. Ingleson, 558 F.3d 888, 889 (9th Cir. 2009), the court reviewed
26   an agreement between the debtor and Vanderbilt University that
27   deferred payment of the debtor’s tuition and costs of other
28   “educational services” to monthly bills to be sent to the debtor.

                                      -11-
 1   Id.   If the debtor did not pay the bills as they became due, a
 2   late fee would be assessed.   Id.    The debtor did not pay the bills
 3   as agreed and later filed for bankruptcy relief.       A couple of
 4   years after the debtor received her discharge, the University sued
 5   the debtor in state court to recover the amounts owed under the
 6   agreement.    In response, the debtor commenced an adversary
 7   proceeding against the University in the bankruptcy court claiming
 8   that the University violated the discharge injunction of § 524(a)
 9   by prosecuting the state court action.     Id.   The bankruptcy court,
10   and later the district court on appeal, concluded that no
11   violation of the discharge injunction occurred because the debt at
12   issue was excepted from discharge under § 523(a)(8).      Id.   The
13   Ninth Circuit affirmed, reasoning that the agreement between the
14   parties was a nondischargeable “loan” under § 523(a)(8), and that
15   it did not matter that no actual money had changed hands between
16   the parties under their arrangement.     Id. at 890.    In explaining
17   its decision, the court cited to In re Johnson, 218 B.R. 449 (8th
18   Cir. BAP 1998).   Id.   The court also cited to the BAP’s opinion in
19   In re Hawkins for the proposition that the amount of the loan must
20   be based on the amount of benefit the debtor received; the court
21   concluded that the “loan” in McKay complied with that requirement.
22   Id. at 891.
23          In re Johnson, the decision relied upon by the Ninth
24   Circuit in McKay, addressed what constituted a “loan” under the
25   pre-BAPCPA version of § 523(a)(8):      “Since the parties stipulate
26   that the [c]ollege is a non-profit institution and that the credit
27   was extended for educational purposes . . . the only issue
28   presently on appeal is whether the [c]ollege’s extension of credit

                                      -12-
 1   was a loan.”   In re Johnson, 218 B.R. 450-51.     In re Johnson
 2   focused on a debt represented by a promissory note, executed to
 3   evidence the debtor’s obligation to a college to pay for tuition,
 4   books, and other expenses.   Id. at 450.     The debtor defaulted on
 5   the note and filed a chapter 13 case.      Id.   The college filed an
 6   adversary proceeding in the debtor’s bankruptcy case asking the
 7   bankruptcy court to declare that the debt represented by debtor’s
 8   note was excepted from discharge.    Id.     The bankruptcy court
 9   concluded that the debt was a “loan” for purposes of § 523(a)(8),
10   and the Eighth Circuit BAP agreed.     Id.    The panel rejected the
11   debtor’s argument that the note was not a “loan” because no funds
12   had ever been given to him by the college:
13        [W]e conclude[] that the arrangement between [the
          debtor] and the [c]ollege constitutes a loan . . . .
14        [B]y allowing [the debtor] to attend classes without
          prepayment, the [c]ollege was, in effect, ‘advancing’
15        funds . . . to [the debtor] . . . [and i]t is immaterial
          that no money actually changed hands.
16
17   Id. at 457.
18        It is important to note that the BAP in In re Johnson, as
19   relied upon by the Ninth Circuit in McKay, acknowledged that
20   another avenue may have existed for the college to obtain an
21   exception to discharge under § 523(a)(8), characterizing the note
22   as “an obligation to repay funds received as an educational
23   benefit”; however, the panel determined it need not venture down
24   that path because the debt arising from the agreement with the
25   debtor was determined to be an educational benefit “loan” made by
26   a nonprofit or a governmental unit.6    218 B.R. at 450.    By
27
28
          6
             Of course, the college/creditor in In re Johnson was a
     nonprofit organization. See In re Johnson, 218 B.R. 450. (stating
     the “parties stipulate that the [c]ollege is a non-profit
     institution”). Similarly, Vanderbilt University is a nonprofit
     institution.

                                     -13-
 1   contrast, in In re Hawkins, the Panel was required to decide
 2   whether the agreement before it created “an obligation to repay
 3   funds received as an educational benefit” because it had concluded
 4   the agreement was not a “loan” under the statute.      317 B.R. at
 5   112.       In addressing this issue, the Panel stated “the plain
 6   language of this prong of the statute requires that a debtor
 7   receive actual funds in order to obtain a nondischargeable
 8   benefit.”      Id. (citations omitted; emphasis added).     The Panel
 9   found this requirement was not satisfied because no “actual funds”
10   were received by the debtor in consideration of her admission and
11   education at the medical school.      Id.
12          C.     Enter BAPCPA.
13          As a result of the Code amendments in BAPCPA, since 2005,
14   § 523(a)(8) has provided that a debtor may not discharge a debt:
15                  unless excepting such debt from discharge
                    under this paragraph would impose an undue
16                  hardship on the debtor and the debtor’s
                    dependents, for—
17
                    (A)(i) an educational benefit overpayment or
18                  loan made, insured, or guaranteed by a
                    governmental unit or nonprofit institution; or
19
                    (ii) an obligation to repay funds received as
20                  an educational benefit, scholarship, or
                    stipend; or
21
                    (B) any other educational loan that is a
22                  qualified education loan, as defined in
                    section 221(d)(1) of the Internal Revenue Code
23                  of 1986, incurred by a debtor who is an
                    individual.7
24
25
            7
             Under § 523(a)(8)(B) to be a “qualified education loan”
26   under 26 U.S.C. § 221(d)(1), it must, among other things, be a
     debt for a “qualified higher education expense,” as defined by 26
27   U.S.C. § 221(d)(2), which is the “costs of attendance . . . at an
     eligible educational institution.” An “eligible educational
28   institution” is one as defined by 26 U.S.C. § 25A(f)(2), which
     provides an “‘eligible educational institution’ means an
                                                          (continued...)

                                         -14-
 1   As can be seen, many of the statute’s former attributes survived
 2   BAPCPA’s revisions.    On the other hand, there were some additions
 3   to its text, and there was also a clear restructuring of the
 4   statute.
 5        Since enactment of BAPCPA, neither the Ninth Circuit nor this
 6   Panel has published decisions interpreting § 523(a)(8)(A)(ii).
 7   And only one published decision, other than the bankruptcy court’s
 8   decision at issue in this appeal, was located from bankruptcy
 9   courts in the Ninth Circuit interpreting § 523(a)(8)(A)(ii).
10   Benson v. Corbin (In re Corbin), 506 B.R. 287 (Bankr. W.D. Wa.
11   2014).8    In In re Corbin, the bankruptcy court explained that,
12   post-BAPCPA, this Code provision:
13               protects four categories of educational claims
                 from discharge: (1) loans made, insured, or
14               guaranteed by a governmental unit; (2) loans
                 made under any program partially or fully
15               funded by a governmental unit or nonprofit
                 institution; (3) claims for funds received as
16               an educational benefit, scholarship, or
                 stipend; and (4) any “qualified educational
17               loan” as that term is defined in the Internal
                 Revenue Code.
18
19   506 B.R. at 291 (citing Rumer v. Am. Educ. Servs. (In re Rumer),
20   469 B.R. 553 (Bankr. M.D. Pa. 2012)).    The bankruptcy court
21   explained that § 523(a)(8)(A)(ii) “was added, covering loans made
22
          7
23         (...continued)
     institution - (A) which is described in section 481 of the Higher
24   Education Act of 1965 (20 U.S.C. 1088) . . . (B) which is eligible
     to participate in a program under title IV of such Act.” An
25   “eligible program” is further defined at 20 U.S.C. § 1088(b).
          8
26           In addition, only one unpublished decision in this circuit
     has tackled this chore. In a case that involved Meridian, relying
27   heavily upon the bankruptcy court’s decision here, the bankruptcy
     court declined to grant an exception to discharge. Inst. of
28   Imaginal Servs. v. Coelho (In re Coelho), No. 13-10975, 2014 WL
     3858514 (Bankr. N.D. Ca. Aug. 4, 2014).

                                      -15-
 1   by nongovernmental and profit-making organizations . . . .”    Id.
 2   at 296.   Canvassing the out-of-circuit bankruptcy court decisions,
 3   the court noted that they “pay no attention to who the lender is,
 4   but focus instead [under § 523(a)(8)(A)(ii)] on whether, in the
 5   plain language of the subsection, the obligation is ‘to repay
 6   funds received as an educational benefit’ as reflected by the
 7   debtor’s agreement and intent to use the funds at the time the
 8   obligation arose.”   Id. at 296-97 (citing Roy v. Sallie Mae (In re
 9   Roy), 2010 WL 1523996 (Bankr. D.N.J. Apr. 15, 2010); Carow v.
10   Chase Student Loan Serv. (In re Carow), 2011 WL 802847 (Bankr.
11   D.N.D. Mar. 2, 2011); Skipworth v. Citibank Student Loan Corp. (In
12   re Skipworth), 2010 WL 1417964 (Bankr. N.D. Ala. Apr. 1, 2010)).
13        Given the lack of case law, the bankruptcy court set out to
14   apply post-BAPCPA § 523(a)(8)(A)(ii) to the facts before it.      In
15   re Corbin involved cash advances from a third-party lender to the
16   debtor to attend college made, in part, because the debtor’s co-
17   worker had agreed to co-sign the loan.   506 B.R. at 290.   The
18   lender later notified the co-signer that the debtor was not paying
19   the loan.   Id.   The co-signer paid the loans and sued the debtor
20   in state court to recover the amounts he had paid the lender.      Id.
21   The debtor then filed a bankruptcy case, and the co-signer
22   commenced an adversary proceeding against the debtor arguing that
23   the debt owed by the debtor to the co-signer was excepted from
24   discharge under both § 523(a)(8)(A)(i) and (a)(8)(A)(ii).    Id.
25   The bankruptcy court declined to hold that this arrangement
26   qualified for an exception from discharge under § 523(a)(8)(A)(i)
27   based upon Ninth Circuit authority on subrogated claims.    Id. at
28   295-96 (citing Nat’l Collection Agency v. Trahan, 624 F.2d 906

                                      -16-
 1   (9th Cir. 1980)).    However, the bankruptcy court concluded that
 2   the debt was excepted from discharge under § 523(a)(8)(A)(ii),
 3   reasoning that because the debtor
 4                intended to and did use the funds she received
                  to pay for educational expenses . . . this
 5                [c]ourt concludes that the provisions of an
                  accommodation, in order to secure for a
 6                student funds for the purpose of paying
                  educational expenses, gives rise to an
 7                obligation on the part of the debtor to repay
                  funds received as an educational benefit once
 8                the co-signer is required to honor its
                  obligation to pay the debt.
 9
10   Id. at 297-98.
11        Of course, the In re Corbin debtor actually received funds
12   from the lender to pay for her education; the facts here are
13   different.
14        D.      Application of § 523(a)(8)(A)(ii) to Meridian’s Debt
15        We agree with the bankruptcy court that the language of
16   § 523(a)(8) is plain and that it must be read in context with a
17   view to the overall statutory scheme.    Moreover, as instructed by
18   the Supreme Court and Ninth Circuit, we must construe § 523(a)
19   narrowly, limiting this discharge exception to those debts
20   described in the statute.    Bullock, 133 S. Ct. at 1760; Hawkins,
21   769 F.3d at 666; In re Huh, 506 B.R. at 263.     Finally, we must
22   construe the provisions of § 523(a)(8) that were found in the pre-
23   BAPCPA version of that statute in accord with the Ninth Circuit
24   authorities interpreting them.    Doing all this, we conclude that
25   the debt represented by Meridian’s arbitration award against
26   Debtor is not excepted from discharge under § 523(a)(8)(A)(ii).
27   As a result, the bankruptcy court did not err in granting summary
28   judgment to Debtor, and denying Meridian’s motion for summary

                                       -17-
 1   judgment.
 2        Section 523(a)(8)(A)(ii) plainly provides that a bankruptcy
 3   discharge will not impact “an obligation to repay funds received
 4   as an educational benefit, scholarship, or stipend.”   It is
 5   undisputed that the agreements between Meridian and Debtor
 6   constitute an “obligation to repay” “educational benefits”
 7   provided by Meridian to Debtor.    However, § 523(a)(8)(A)(ii)
 8   requires more.   To except a debt from discharge under this
 9   subsection, the creditor must demonstrate that the debtor is
10   obliged to repay a debt for “funds received” for the educational
11   benefits.    The phrase “funds received” has been interpreted by the
12   BAP, in an opinion which was as adopted by the Ninth Circuit as
13   its own, to require “that a debtor receive actual funds in order
14   to obtain a nondischargeable benefit.”   In re Hawkins, 317 B.R. at
15   112 (emphasis added); accord In re Oliver, 499 B.R. 617, 625
16   (Bankr. S.D. Ind. 2013) (holding under § 523(a)(8)(A)(ii), “[i]n
17   order to be obligated to repay funds received, [the] [d]ebtor had
18   to have received funds in the first place.”) (emphasis in
19   original).   Because the In re Hawkins decision construed the very
20   same language of the statute implicated here, we conclude that In
21   re Hawkins controls the outcome in this case notwithstanding that
22   BAPCPA later amended § 523(a)(8).    See Ball v. Payco-General Am.
23   Credits, Inc. (In re Ball), 185 B.R. 595, 597 (9th Cir. BAP 1995)
24   (“We will not overrule our prior rulings unless a Ninth Circuit
25   Court of Appeals decision, Supreme Court decision or subsequent
26   legislation has undermined those rulings.”).   That the arrangement
27   between the parties in In re Hawkins was dissimilar to the
28   agreement in this case is of no consequence, and renders that

                                       -18-
 1   decision no less binding, concerning the proper construction of
 2   § 523(a)(8)(A)(ii).   This is so because In re Hawkins construed
 3   the very same statutory language implicated here, and because the
 4   Panel and the Circuit have concluded that this language requires
 5   that “a debtor receive actual funds.”   Id. at 112.
 6        This result is bolstered by the changes made to § 523(a)(8)
 7   by Congress in BAPCPA.   As noted above, the exact wording used in
 8   amended § 523(a)(8)(A)(ii) was formerly a part of § 523(a)(8).
 9   However, BAPCPA set off the “obligation to repay funds received”
10   language from the other provisions of § 523(a)(8) in a new
11   subsection.   We agree with the bankruptcy court, that in
12   restructuring the discharge exception in this fashion, Congress
13   created “a separate category delinked from the phrases
14   ‘educational benefit or loan’ in § 523(a)(8)(A)(i) and ‘any other
15   educational loan’ in § 523(a)(8)(B).”   In re Christoff, 510 B.R.
16   at 882.   Put another way, “new” § 523(a)(8)(A)(ii), now standing
17   alone, excepts from discharge only those debts that arise from “an
18   obligation to repay funds received as an educational benefit,” and
19   must therefore be read as a separate exception to discharge as
20   compared to that provided in § 523(a)(8)(A)(i) for a debt for an
21   “educational overpayment or loan” made by a governmental unit or
22   nonprofit institution or, in § 523(a)(8)(B), for a “qualified
23   education loan.”
24        Meridian’s arguments conflating “loan” as used in
25   § 523(a)(8)(A)(i) and (a)(8)(B), and as interpreted by McKay and
26   In re Johnson with “an obligation to repay funds received” as
27   provided in § 523(a)(8)(A)(ii), are unconvincing.     According to
28   Meridian, “[t]here is no reason why the word ‘funds’ should not be

                                     -19-
 1   interpreted in the same light that ‘loans’ has been interpreted in
 2   prior cases in the Ninth Circuit . . . .”   Appellant’s Op. Br. at
 3   14.   In effect, Meridian argues that we should read
 4   § 523(a)(8)(A)(ii) to say “loans received” as opposed to “funds
 5   received.”   But this we must not do.   See Conn. Nat’l Bank v.
 6   Germain, 503 U.S. 249, 253-54 (1992) (“[I]n interpreting a statute
 7   a court should always turn first to one, cardinal canon before all
 8   others.   We have stated time and again that courts must presume
 9   that a legislature says in a statute what it means and means in a
10   statute what it says there.”) (citations omitted).     Instead, we
11   must presume that, in organizing the provisions of § 523(a)(8) as
12   it did in BAPCPA, Congress intended each subsection to have a
13   distinct function and to target different kinds of debts.9
14         We are also unpersuaded by Meridian’s reliance on those
15   bankruptcy cases that, perhaps inadvertently, imprecisely quote
16   the provisions of the discharge exception statute as applying to
17   “loans received,” as opposed to the “obligation to repay funds
18   received” dealt with by § 523(a)(8)(A)(ii).   See, e.g., In re
19   Rumer, 469 B.R. at 561 (stating “loans received as an educational
20   benefit, scholarship, or stipend” are excepted from discharge);
21
           9
22           On this point, we agree with Debtor’s counsel’s statement
     at oral argument that § 523(a)(8)(A)(ii) is not a “catch-all”
23   provision designed to include every type of credit transaction
     that bestows an educational benefit on a debtor. Instead, this
24   subsection includes a condition, distinct from those in the other
     subsections of § 523(a)(8), that must be fulfilled. In re Hawkins
25   held that this unique requirement, that “funds [be] received” by
     the debtor, mandates that cash be advanced to or on behalf of the
26   debtor. In light of the many programs available to students which
     provide cash benefits to students, like veteran’s educational
27   benefits, stipends for teaching assignments, and cash
     scholarships, it is not absurd to assume that Congress intended
28   the scope of § 523(a)(8)(A)(ii) to target obligations other than
     those arising from traditional student loans.

                                     -20-
 1   see also Beesley v. Royal Bank of Canada (In re Beesley), 2013 WL
 2   5134404 (Bankr. W.D. Pa. Sept. 13, 2013) (quoting Rumer and its
 3   misstatement of the law); Liberty Bay Credit Union v. Belforte (In
 4   re Belforte), 2012 WL 4620987 (Bankr. D. Mass. 2012) (same).      In
 5   addition, as observed by the bankruptcy court, the other cases
 6   relied upon by Meridian are distinguishable because they all dealt
 7   with cases where the debtor actually received funds.   See, e.g.,
 8   In re Corbin, 506 B.R. at 287; Brown v. Rust (In re Rust), 2014 WL
 9   1796154 (Bankr. E.D. Ky. May 6, 2014); Maas v. Northstar Educ.
10   Fin., Inc. (In re Mass), 497 B.R. 863 (Bankr. W.D. Mich 2013); In
11   re Beesley, 2013 WL 5134404; In re Belforte, 2012 WL 4620987; In
12   re Carow, 2011 WL 802847; Sensient Techs. Corp. v. Baiocchi (In re
13   Baiocchi), 389 B.R. 828 (Bankr. E.D. Wis. 2008).   Finally, while
14   we have reviewed the other decisions cited by Meridian that,
15   arguably, reach a different conclusion than we do here, because
16   the courts’ analysis and reasoning in those cases is not fully
17   developed, we find them unpersuasive.   See In re Roy, 2010 WL
18   1523996; The Rabbi Harry H. Epstein School, Inc. v. Goldstein (In
19   re Goldstein), 2012 WL 7009707 (Bankr. N.D. Ga. Nov. 25, 2012).
20        Simply put, because Debtor did not actually receive any
21   funds, Meridian’s debt is not excepted from discharge under
22   § 523(a)(8)(A)(ii).
23                             VI.   CONCLUSION
24        The bankruptcy court did not err in granting summary judgment
25   to Debtor.   We therefore AFFIRM the decision of the bankruptcy
26   court.
27
28

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