Out of Reach: Protecting Parental Contributions to Higher Education from Clawback in Bankruptcy

Parental contributions to higher education have become commonplace. However, courts are divided on how contributions by parents towards the college education of their children should be treated when those parents file for bankruptcy. Trustees are attempting to use the fraudulent transfer provisions of the Bankruptcy Code to \u27clawback\u27 payments made to colleges and universities by debtors for the education of their children. The author proposes amendments to the Code to protect payments to institutions of higher education by parent debtors on behalf of their children. With simple additions to § 544 and § 548, federal lawmakers can advance the public\u27s interest in higher education, protect creditors, and limit the need for litigation around the subject