Talk to me about college

[keepsmiling]

My son has been accepted to a top-tier college. We are very grateful for that and the very generous scholarship he has been offered (sometimes being poor comes in handy).

While most of his tuition will be covered by that and some help from a relative, we will be responsible for some expenses. Starting with a $500 deposit due TOMORROW upon enrollment- yes, he waited til the last possible minute, has been unable to decide which school/offer to take....

So here's my question. Is this a "luxury" purchase? My dh is getting himself very worked up imagining an argument with the tt over this. We aren't going to turn down this amazing offer but aren't sure of the best way to handle it. Still haven't hired an atty as we are waiting on tax refund to pay for it.

Would love to hear from others as to their children's schooling vis a vis bk. Thanks!

[debee]

It's not a "luxury" but it might cause problems because it's education-related. Since student loans aren't dischargeable, I would be concerned that this kind of expense might give the creditor opportunity to object. I wonder if it would be like paying your taxes with a credit card (also not dischargeable) , but I'm not sure.

edit to add: congrats to your son.

[keepsmiling]

Debee, thanks but not sure I understand.

[Toby629]

We just finished with nine straight years of college for our two sons last year AND filed for BK in Nov. 2010, discharged in March 2011. Mostly our problems were from DH unexpected job loss in 2007 and not able to find decent employment which caused us to go through all of our resources thus ending in BK. Our first son went to a private college in Ohio on a couple of scholarships and grants, but still had to pay some difference for tuition and etc. He is now just graduating a master's program this month and has gotten a six figure position starting in June. His attending the private college prepared him for the master's program and his bright future in medicine. I would say absolutely, in our case, the private college was a HUGE opportunity with the scholarships for him and his degree from this college, we believe helped him to get into the master's program he is now in. Even if your child has to take out student loans for some of the not covered expenses by the scholarship, it can be the opportunity of their lifetime to prepare them for their career and could be the catalyst to open doors post graduation. Congrats that your child has such an opportunity available with a generous scholarship! We just took it year by year and it all worked out. Every person's situation will be different and you have to really look at everything and check everything out. One thing that helped was that our son signed up for the school's work/study program and he was able to help with paying for some of his school expenses through it, that is something you should also check to see if the college has this. A way to help defray some of the costs also. Hope it all works out for you!

[ValleYum]

We paid a ~$500 nursing school deposit for our son in the 6 month period prior to our BK. We used our debit card so we essentially paid cash for it. Our trustee never said a word. It was not a loan to our son - so we didn't have to disclose it as one - but our attorney 100% knew we had paid it.

[keepsmiling]

We would be using our debit card. Credit cards are ancient history.
I just am not sure how college expenses are viewed- if they are "necessary living expenses" or whatever- don't want to have to "buy" it back.. ack

[debee]

Debee, thanks but not sure I understand.

Not all debts are dischargeable. There's a list in the bankruptcy code. 11 USC 523 (a)(8) is the section that covers educational benefit items. If you were to get a student loan to pay your son's fees on his behalf, that debt would not be dischargeable in bankruptcy.

If, instead of getting a loan to help cover his expenses, you put them on your credit card, then the creditor has a position to file an AP and object to the discharge of that debt. You could agree that the debt is not dischargeable and agree to pay it or you could pay your lawyer to defend against the AP. Either way, you end up out of pocket.

I am not saying this will happen, but this is the risk that I believe you would be taking if you pay this education cost with a credit card.

edit: It took me awhile to post (kids need me) and I got logged out so I missed some of the thread. Anyway, using your debit card is fine. It's not a preferential payment that you have to list because it is under the threshold amount of $600 and anyway, even if it was picked out you have a defense in that it's not for an antecedent debt.

[Exployer1234]

I paid 1200 dollars to the college I was attending 8 months prior to my BK. My trustee was fine with this. It was past the 90 day mark, but the trustee could have still made an issue out of it.

[HHM]

Deposits are generally not going to be frowned upon. Where you really get into trouble with kids in college and BK is if you are supporting them on an ongoing basis and but for paying that support, you could pay something to your creditors. So, if a person is paying tuition on a monthly payment plan, and tries to file BK, that is where the problems arise.

[keepsmiling]

Thanks HMM. We are well under the median. Does this still apply? Are we allowed to give him anything?