Bankruptcy Battles Force Colleges to Return Students’ Tuition Payments

by San Antonio Attorney

A total of $276,434.80 in tuition payments have been returned by colleges because of the students’ parents who filed for bankruptcy. There have been at least two dozen suits filed within the past two years.

New York Institute of Technology, Ithaca College, and Villanova University are some of the colleges that the bankruptcy trustees have sued to recover tuition money. The trustees argue that parents who were financially distressed should have paid their creditors first instead of paying for their children’s tuition.

Many schools have agreed to settle the suits rather than spend money in fighting the cases in court.  But there are two colleges battling the lawsuits, which could lead judges to elucidate if the contentious lawsuits are reasonable. Federal laws are being created to prohibit trustees from going after schools.

Some of the recent settlements are:

  •     The University of Maryland settled a lawsuit by agreeing to return $9,999 of the $61,595.33 tuition payments.
  •     Villanova University settled a lawsuit by agreeing to pay $10,000 of the $12,543 that was paid for the education of the son of a resident in Connecticut who declared bankruptcy.
  •     St. Vincent’s College in Connecticut will pay $5,270 to end a tuition dispute over $10,641.45 of tuition payments.

When Quinnipiac University returned $17,000 in 2015, the settlement highlighted that the student may suffer the consequences of the QU’s reservation of its right to get back the settlement amount from the student of a bankrupt parent and withhold the diploma and transcript if the amount is not paid.

It is expected that more colleges will be returning tuition payments in the weeks to come.

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