The Wall Street Journal reported last May bankruptcy courts are seeing
increased traffic lately from parents who file for bankruptcy over their
children’s college tuition costs. Increasingly, the trustee responsible
for collecting money on behalf of creditors have decided to return tuition
to insolvent parents in order to have the parents pay off debt with the
money instead.
Since 2008 over 25 colleges have been asked to return tuition money with
more than a dozen following through with repayment. New York University,
for example, was sued in October of last year to return just over $27,000
for a Minnesota family who was in debt. An NYU spokesman responded, saying
it is, “deeply unfair to that institution which has provided real
value to the family.”
Another university was sued by the trustee in charge of recovering money
for creditors when a student’s parents filed for chapter 7 bankruptcy
back in 2013. The school returned $4,000.
While figures are not extant, both chapter 7 trustees and consumer bankruptcy
lawyers agree such suits were not happening in significant numbers as
they are today and they expect such tuition-related lawsuits to increase
moving forward.
If you are facing bankruptcy for any reason, reach out to the Denton Law
Group—(619) 458-3739.
