In the 2003 case Tennessee Student Assistance Corporation v. Pamela L. Hood, the U.S Supreme Court ruled that federal bankruptcy courts have jurisdiction to determine whether student loans can be discharged in a bankruptcy proceeding without first obtaining authorization from an appellate court. The case arose when Pamela Hood filed for Chapter 7 bankruptcy and sought to discharge her student loan debt on grounds of "undue hardship." The Tennessee Student Assistance Corporation (TSAC) argued that as a state agency it was immune under the Eleventh Amendment from being sued in federal court without its consent or Congress's abrogation of immunity. However, the Supreme Court held unanimously that TSAC’s sovereign immunity did not protect it because by participating in the federal program they had agreed to abide by those rules which included potential litigation over discharging loans due to undue hardship.

In the case of Tennessee Student Assistance Corporation v. Pamela L. Hood, there was no dissenting opinion recorded by any Justice on the Supreme Court bench. The court unanimously ruled in favor of Hood, stating that federal bankruptcy courts have jurisdiction to hear a complaint brought by a debtor against a state agency under their general "arising under" jurisdiction without violating sovereign immunity principles because they are not required to issue process against the state or its property and thus do not infringe upon state sovereignty.