           United States Bankruptcy Appellate Panel
                       FOR THE EIGHTH CIRCUIT



                               No. 01-6042MN


In re:                                 *
                                       *
Nanci Anne Long,                       *
                                       *
      Debtor.                          *
                                       *
Nanci Anne Long,                       *       Appeal from the United States
                                       *       Bankruptcy Court for the
      Plaintiff-Appellee,              *       District of Minnesota
                                       *
             v.                        *
                                       *
Educational Credit Management Corp., *
                                       *
      Defendant-Appellant,             *
                                       *
United States Department of Health and *
Human Services,                        *
                                       *
      Defendant.                       *


                           Submitted: May 2, 2003
                             Filed: May 8, 2003



Before HILL, SCHERMER and FEDERMAN, Bankruptcy Judges

SCHERMER, Bankruptcy Judge
      Educational Credit Management Corporation (“Appellant”) appealed the
bankruptcy court order discharging the student loan obligation of debtor Nanci Ann
Long (“Debtor”). This court upheld the bankruptcy court’s order under a clearly
erroneous standard.1 After further appeal, however, the Eight Circuit Court of
Appeals has remanded the matter for a de novo review by this Court.2

                                        ISSUE

      The issue on appeal is whether the Debtor’s student loan obligation to
Appellant should be discharged as imposing an undue hardship on the Debtor
pursuant to 11 U.S.C. § 523(a)(8). We conclude that under the totality of
circumstances test such obligation will not impose an undue hardship on the Debtor
and therefore should not be discharged.

                                   BACKGROUND

      The Debtor is a single woman with a ten year old child. She was thirty-nine
years old at the time of the trial in this matter. The Debtor attended Northwest
College of Chiropractic and financed her education, in part, through the student loans
which are the subject of this dispute. She graduated and became a licensed Doctor
of Chiropractic in 1987. She practiced chiropractic medicine from 1987 through
1995, first working for others, then starting her own practice with another doctor.

       In 1993, the Debtor began to suffer “flu-like” symptoms. Her condition
deteriorated over the next two years. In 1995 she transferred her practice to another


      1
       Long v. Educ. Credit Mgmt. Corp. (In re Long), 271 B.R. 322 (B.A.P. 8th
Cir. 2002).
      2
          Long v. Educ. Credit Mgmt. Corp. (In re Long), 322 F.3d 549 (8th Cir.
2003).
                                           2
doctor. Her chiropractic license subsequently lapsed. In 1997 she sought medical
treatment for her condition. The Debtor eventually began a regimen of medication
which has enabled her to regain employment.

      In the fall of 1998, the Debtor enrolled in Metropolitan State University to
pursue a degree in human services and a minor in social gerontology. She hopes to
pursue a career in hospice counseling.

       The Debtor works approximately thirty-two hours per week as a laboratory
manager at a community college nine months of the year. She earns $12.59 per hour.
Her annual income is $14,000.00, or $1,166.66 per month. She lives with her parent
and pays them between $500 and $600 per month to cover rent, utilities, car payment,
car insurance, health insurance, cellular telephone, child care, and food. She also
pays $50 per month for medical insurance co-payments, personal items, and toiletries;
$100-$275 per month for gasoline; $100 per month for dining out, groceries, and
entertainment; and $80 per month for her daughter’s private school tuition. She also
pays her tuition which varies in price between $500 and $800 depending on the
course.

      At the time of trial, the Debtor owed the Appellant approximately $61,800,
including principal, interest, and collection costs, on consolidated student loans which
had totaled $35,322.81 in 1987.

       The Debtor also has three student loans payable to the United States
Department of Health and Human Services (“DHHS”) guaranteed by the Health
Education Assistance Loan Program in the amount of $14,700 which the bankruptcy
court determined to be non-dischargeable (the “HEAL Loans”).




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       The Debtor qualifies for the Income Contingent Repayment Plan offered by the
Department of Education through the William D. Ford Loan Consolidation Program.
Pursuant to the Income Contingent Repayment Plan, the Debtor’s monthly payments
to cover the loan to Appellant and the HEAL Loan would be $54.00 based on her
current level of income. If the Debtor participated in this program for twenty-five
years, any remaining balance would be cancelled at that time. The Debtor is aware
of the Income Contingent Repayment Plan but did not apply for it.

       On May 31, 2000, the Debtor filed a voluntary petition for relief under Chapter
7 of the Bankruptcy Code. She filed a complaint seeking a determination that her
indebtedness to the Appellant as well as her indebtedness to the DHHS on the HEAL
Loan should be discharged as an undue hardship. The bankruptcy court determined
that the HEAL Loan should not be discharged but that the loan to the Appellant
should be discharged. The Appellant appealed to this Court which affirmed the
bankruptcy court’s decision in a split opinion under the clearly erroneous standard of
review. On further appeal, the Eight Circuit Court of Appeals determined that the
proper standard of review is a de novo review and remanded to this Court to conduct
this de novo review.

                            STANDARD OF REVIEW

      We review the bankruptcy court’s determination of undue hardship de novo.
Long v. Educ. Credit Mgmt. Corp. (In re Long), 322 F.3d 549, 553 (8th Cir. 2003).

                                   DISCUSSION

       Pursuant to Section 523(a)(8) of the Bankruptcy Code, a student loan
obligation is excepted from discharge “unless excepting such debt from discharge . . .
will impose an undue hardship on the debtor and the debtor’s dependents.” 11 U.S.C.
¶ 523(a)(8). The debtor bears the burden of proving undue hardship by a

                                          4
preponderance of the evidence. Woodcock v. Chemical Bank, NYSHESC (In re
Woodcock), 45 F.3d 363 (10th Cir. 1995); Andrews v. S.D. Student Loan Assistance
Corp. (In re Andrews), 661 F.2d 702, 704 (8th Cir. 1981); Standfuss v. U.S. Dept. of
Educ. (In re Standfuss), 245 B.R. 356, 359 (Bankr. E.D. Mo. 2000); Kopf v. U.S.
Dept. of Educ. (In re Kopf), 245 B.R. 731, 734 (Bankr. D. Me. 2000), citing Grogan
v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); Clark v. U.S.
Student Aid Funds, Inc., 240 B.R. 758, 761 (Bankr. W.D. Mo. 1999).

       Congress’ intent in excepting student loans from discharge was clear: Congress
wanted to prevent the “undeserving student borrower from abusing the bankruptcy
process.” Andresen v. Neb. Student Loan Program, Inc. (In re Andresen), 232 B.R.
127, 130 (B.A.P. 8th Cir. 1999). Congress did not, however, define undue hardship.
In the Eighth Circuit, the test for undue hardship requires an inquiry into the totality
of circumstances with special attention to the debtor’s past, current, and reasonably
reliable future financial resources; the reasonable necessary living expenses of the
debtor and the debtor’s dependents; and any other relevant facts and circumstances
unique to the particular bankruptcy case. Long v. Educ. Credit Mgmt. Corp. (In re
Long), 322 F.3d 549, 554 (8th Cir. 2003); Andrews v. S.D. Student Loan Assistance
Corp. (In re Andrews), 661 F.2d 702 (8th Cir. 1981); Andresen v. Neb. Student Loan
Program, Inc. (In re Andresen), 232 B.R. 127, 139-40 (B.A.P. 8th Cir. 1999).

      We identify the three factors relevant to the totality of circumstances inquiry,
apply the three prong test, and conclude that the Debtor will not suffer an undue
hardship if required to repay the loans under the Income Contingent Repayment Plan.

              I. The Debtor’s Current and Future Financial Resources

      The Debtor’s current monthly income working as a laboratory manager is
$1,166.66. She only works thirty-two hours per week nine months of the year. She
has demonstrated no inability to work full time (forty hours per week) or year round.

                                           5
If she worked full time nine months out of the year, her monthly income would be
$1,510.80. If she worked part time (32 hours per week) year round, her monthly
income would be $1,678.66. If she worked full time year round, her monthly income
would be $2,098.33. The Debtor may incur additional child care expenses if she
increased her work, but she has failed to demonstrate that the additional child care
costs would exceed the additional income she could earn. The Debtor has elected to
pursue a degree in human services and a minor in social gerontology. This may be
a reason she only works part time; however it does not explain why she cannot work
year round. Furthermore, to the extent she earns an additional degree, her income
potential should increase in the future.

             II. The Debtor’s Necessary Reasonable Living Expenses

      The Debtor’s monthly expenses range from $830 to $1,105. She and her
daughter lives modestly with the Debtor’s parents. She spends $80 per month to send
her child to a private school. She also elects to pursue an additional degree at a cost
of between $500 and $800 per course.

          III. Other Circumstances Unique to Debtor’s Bankruptcy Case

       The Debtor’s testimony that she was under a doctor’s care for treatment of a
condition that began with “flu-like” symptoms and deteriorated thereafter was not
contradicted. However, she is currently on a regimen of medication which enables
her to work and pursue an additional degree at the same time.

               IV. Application of the Totality of Circumstances Test

      The Debtor’s monthly income of $1,166.66 exceeds her monthly expenses,
which range from $830 to $1,105, by an amount ranging from $61.66 per month to
$336.66 per month. This surplus income is sufficient to cover the $54 monthly

                                          6
payment for both the loan to Appellant and the HEAL Loan under the Income
Contingent Repayment Plan. Therefore we conclude that the loan to Appellant
should not be discharged.

      To the extent the repayment stream under the Income Contingent Repayment
Plan is insufficient to retire the entire indebtedness, any unpaid balance will be
forgiven after twenty-five years. We do not believe a twenty-five year repayment
period creates an undue hardship. The repayment period is shorter than that of a
standard thirty-year mortgage. Furthermore, the thirty-nine year old Debtor will
complete payments before she reaches the retirement age of sixty-five.

       This conclusion does not take into consideration the fact that the Debtor could
easily supplement her income by working more – either year round or full time or
both. Plus we need not second guess her decisions to send her daughter to private
school because even with this expense she can afford to repay her student loans under
the Income Contingent Repayment Plan.

       The Debtor’s budget may be strained by tuition incurred in her pursuit of an
additional degree. However, her existing student loan creditors should not be forced
to supplement the Debtor’s further education. To the extent she elects further
education, she can increase her income by increasing her work hours to cover tuition
costs.

                                  CONCLUSION

      The Debtor bears the burden of proving that excepting her student loans from
discharge pursuant to Section 523(a)(8) of the Bankruptcy Code would result in an
undue hardship. The Debtor has failed to establish undue hardship. Accordingly, the
order of the bankruptcy court discharging the Debtor’s student loan obligation to
Appellant as an undue hardship on the Debtor is REVERSED.

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A true copy.

      Attest:

               CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
               EIGHTH CIRCUIT




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