Michael Hedlund v. the Educational Resources Inst

Michael Hedlund is a law school graduate who asserts that he cannot pay off his student loans. After filing for bankruptcy, he sought a discharge of his student loans under 11 U.S.C. § 523 (a)(8). The bankruptcy court granted a partial discharge, but, on appeal, the district court reinstated the student loan- debt in full as non-dis-chargeable. Specifically, the district court ruled that Hedlund had not acted in good faith, which is one of three prerequisites for relief under § 523(a)(8).

We hold that the district court erred in reviewing the bankruptcy court’s good faith finding de novo. In a § 523(a)(8) proceeding, the good faith finding should be reviewed for clear error. Under the proper standard of review, we affirm the bankruptcy court’s ruling.

I.

Hedlund was thirty-three years old at the time of the bankruptcy proceedings. He had earned a bachelor’s degree in business administration from the University of Oregon and a law degree from Willamette Law School. Hedlund financed his education with Stafford loans, which were held in part by The Education Resources Institute (“TERI”) and in part by the Pennsylvania Higher Education Assistance Agency (“PHEAA”).

After…