Appellate decision in bankruptcy case creates financial risks for higher ed institutions

In November 2019, the U.S. First Circuit Court of Appeals decided in In re Palladino , No. 17‐1334 (11/12/19, U.S. 1st Circuit Court of Appeals), that a bankruptcy trustee may claw back from a college or university tuition payments by the parents of an adult child if the payments were made within two years of the filing of a bankruptcy petition and the parents were insolvent at that time. The court specifically refused to address whether it would reach the same outcome if the child was a minor at the time the payments were made.