On August 12, the U.S. Bankruptcy Appellate Panel for the 8th Circuit upheld a lower court’s ruling that discharged a debtor’s student loan debt owed to a state bank, finding that repayment would impose an undue hardship. Applying the “totality-of-the-circumstances test,” the panel considered the debtor’s age, income, reasonable expenses, lack of significant retirement savings, and ongoing mental health challenges. The debtor, a 50-year-old with limited assets and inconsistent employment history, owed more than $96,000 to the bank and more than $108,000 to the Department of Education. The appellate panel noted the bank’s loan terms were inflexible, offering no income-based repayment plan, interest rate reduction or loan forgiveness — unlike the federal loan. Based on a review of the various factors, the court agreed that the private loan debt should be discharged as an undue hardship, while declining to discharge the Department of Education loan, citing available income-driven repayment options.