Hedlund

MEMORANDUM

The essential question tendered for decision on this appeal is whether the bankruptcy court erred in holding that debtor Michael Hedlund’s student loans were partially dischargeable under 11 U.S.C. § 523 (a)(8), or the bankruptcy appellate panel (“BAP”) erred in reversing the bankruptcy court and holding that Hed-lund did not meet the dischargeability requirements of § 523(a)(8). We have jurisdiction pursuant to 28 U.S.C. § 158 (d), and vacate and remand.

In his bankruptcy case, Hedlund attempted to discharge approximately $85,000 in student loans to finance his education at Willamette University law school. Hedlund never passed the bar exam and was employed as a juvenile counselor for the Kalmath County Juvenile Department. The bankruptcy court found that requiring Hedlund to repay more than $30,000 of his student loans would impose an undue hardship on him and his dependents; it therefore discharged his student loan debts in excess of $30,000.

The creditor, Pennsylvania Higher Education Assistance Agency appealed to the BAP, which reversed. The BAP held that it would not be unconscionable for Hed-lund to eliminate a number of claimed expenses, including a new car…