Decena financed her medical studies with a series of loans totaling $161,592, which she took out from Citizens Bank, which is headquartered in Rhode Island. She made loan payments from 2006 until 2011, but she quit making payments when she returned to school to obtain a masters' degree.
In 2015, Decena filed a "no asset" Chapter 7 bankruptcy petition and later filed an adversary complaint to discharge her student loans with Citizens Bank. Citizens Bank failed to answer her complaint and the court clerk entered a default.
At a hearing to get a default judgment entered against Citizens, an attorney appeared to represent the bank. Citizens' attorney argued that the default should be set aside on the ground that Decena had sent her lawsuit by regular mail rather than certified mail. The bankruptcy court rejected this argument, reasonably pointing out that Citizens obviously had notice of Decena's lawsuit because it had sent a lawyer to defend the bank's interests.
The court then considered whether Decena had a legitimate ground for discharging her student-loan debt in bankruptcy. Interestingly, Decena did not argue that it would be an undue hardship for her to pay back the loans--the position taken by most student-loan debtors in bankruptcy. Rather she maintained that the loan was not the kind education loan debt that was covered by the undue hardship exception.
The court agreed with her. In essence, the court ruled that a private loan to attend an unaccredited, unlicensed medical school is not the kind of loan that can be excepted from discharge in bankruptcy under the undue hardship rule. Nor was it a "qualified education loan" that came under the undue hardship exception.
Key to the court's decision was its finding that St. Christopher's College of Medicine was not listed in the Federal Schools Code during the year Decena completed her studies. Thus, the court ruled, Decena "established a prima facie case that St. Christopher's is not an 'eligible educational institution,'" entitled to benefit from the Bankruptcy Code's undue hardship rule.
What can we learn from this quirky case? Three things:
1. Don't enroll in an unlicensed, unaccredited African medical school if you want to practice medicine in the United States. Perhaps Lorelei Decena should have investigated St. Christopher's a little more thoroughly before borrowing money to study there.
2. If you are a bank, don't lend money to someone to study medicine in Africa unless the institution the debtor will attend is on the Federal Schools Code list. Citizens Bank was apparently under the impression that its loans to Decena could not be easily discharged in bankruptcy, but the bank was wrong.
3. If you are an African medical school that seeks to enroll American students, you should make sure your institution is listed in the Federal Schools Code.
In fact, St. Christopher's lapse in this regard is puzzling. Over 500 foreign institutions are listed on the Federal Schools Code, making them eligible to participate in the U.S. student loan program, including more than two dozen foreign medical schools. Why didn't St. Christopher's do whatever it had to do to get its name on that list?
This case illustrates the global expanse of the federal student loan program, which allows Americans to borrow money to attend colleges all over the world (although not St. Christopher's in Senegal). We are a wealthy nation of more than 300 million people. You would think we could manage medical education in such a way that no one would need to borrow money in order to study medicine in a foreign country.
Graduates of St. Christopher Iba Mar Diop College of Medicine may practice medicine in the United States through the Educational Commission for Foreign Medical Graduates (ECFMG).
It is important that future students intending on practicing medicine in the United States obtain licensing information direct from the appropriate state agencies. This information can be obtained from the Federal State Medical Boards (FSMB). Students are expected to have a thorough understanding of medical licensure laws in their state or states of intended practice before applying. Many states have specific rules and requirements beyond the medical school curriculum and applicants are urged to make specific inquiries into what these are before making a commitment to the College.
Decena v. Citizens Bank, 549 B.R. 11 (Bankr. E.D.N.Y. 2016).