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Student Loan Discharge Proceeding Not a 'Suit'

By Jeff J. Friedman

The Supreme Court, in its May 17, 2004 decision in Tennessee Student Assistance Corporation v. Hood, __ U.S. ___ (2004), declined to reach the issue of whether the Bankruptcy Clause in Article I of the Constitution grants authority to Congress to abrogate state sovereign immunity from private suits. Instead, in a 7-2 decision, the Court ruled that a proceeding to determine whether an otherwise nondischargeable student loan can be discharged because of an undue hardship on the debtor is not a “suit” against the state for purposes of the Eleventh Amendment. The Court's decision, written by Chief Justice Rehnquist, turned on the in rem nature of the proceeding and reasoned that the bankruptcy court did not need jurisdiction over the state where it had jurisdiction over the debtor and her property.

The Decision

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