Congressmen Chris Collins, R-NY-27, and Blake Farenthold (Texas) released the following statements after introducing the Protecting All College Tuition Act. The PACT Act protects students, parents and colleges against a new practice by bankruptcy trustees targeting tuition payments parents have made on their children's behalf.
"Higher education is one of the best ways to guarantee a child's future success," Collins said. "We made a pact to provide our children with the tools to succeed. As a parent, I wake up every morning thinking about how I can make my child's future better, and I believe that feeling is shared by a majority of parents. The PACT Act will ensure that the financial sacrifices parents made to pay their children's tuition are protected from seizure in bankruptcy proceedings."
"The thought that if I had a financial hardship it could retroactively endanger my daughters' educations and their future is shocking and just plain wrong," Farenthold said. "The new practice of bankruptcy collectors suing colleges for tuition already paid is inappropriate and we need to take action to stop it before more struggling parents lose what matters most to them: the wellbeing of their kids. This bill provides a simple fix to the problem by clarifying that tuition paid isn't some kind of fraudulent transfer, or of dubious value, but a real investment in the future of our children and our nation."
The issue was recently highlighted in a Wall Street Journal article showing the growing trend of bankruptcy trustees collecting debts of parents by targeting the investments they have made in their children's education. To combat this growing problem, Collins introduced this legislation.
The PACT Act will establish that college tuition payments qualify under the "reasonably equivalent value" bankruptcy standard, exempting tuition payments from questionable bankruptcy practices.
Full text of the legislation can be read at https://chriscollins.house.gov/sites/chriscollins.house.gov/files/COLLNY_010_xml%20%28v3%20and%20final%20for%20introduction%29.pdf.