Yolande E. Essangui v. SLF V-2015 Trust, et al., Adversary No.16-00201, Main case 16-12984

The issue before the Court is whether a private loan extended for educational purposes is dischargeable in a debtor’s chapter 7 case. Section 523(a)(8) includes three subsections addressing educational debt that is excepted from discharge. The parties do not argue that either section 523(a)(8)(A)(i) or 523(a)(8)(B) is applicable to this case. Rather, the defendant asserts that its debt is covered by section 523(a)(8)(A)(ii), as “an obligation to repay funds received as an educational benefit, scholarship, or stipend.” 11 U.S.C. § 523(a)(8)(A)(ii). Based on the facts of this case, the Court holds that the private student loan at issue is not an educational benefit under section 523(a)(8)(A)(ii) and, therefore, is dischargeable in the debtor’s chapter 7 case. To hold otherwise would ignore the plain language of the statute and render subsections (A)(i) and (B) largely meaningless. Indeed, if subsection (A)(ii) covers any loan for educational purposes, much of the language in the remainder of the section is superfluous. The Court accordingly entered an Order granting the debtor’s motion for summary judgment and denying the defendant’s motion for summary judgment.