Just recently, a federal lawmaker is making a proposal to ban bankruptcy trustees from attempting to claw back tuition funds from universities (and in some instances, college students) --- a legal strategy that may arise in a bankruptcy case.
Chris Collins, a New York Republican, brought a bill that would halt bankruptcy trustees from filing suits against universities and college students to take back tuition funds that was paid years before.
Parents filing for bankruptcy after making payment of their children’s college tuition could be criticized by bankruptcy trustees (appointed by the court), who argue saying that money should’ve been directly spent on their own debts.
With Collins’ bill, it would entirely be up for the parents to decide their children’s education over other bills like medical debts or credit card.
Bankruptcy observers predict that the number of tuition-related cases will increase along with tuition costs.
Specifically, the bill wouldn’t include tuition money from the list of monetary transfers that can be clawed back.