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College Tuition and Bankruptcy

Can college tuition be deducted as an expense on the Means Test when filing for bankruptcy?

College Tuition and Means Test - Piggy bank with cap and books. Objects over white

In most cases, college tuition expenses are not a deductible expense for purposes of qualifying for bankruptcy.  However, there are limited exceptions when school tuition and/or expenses could be deducted.

Means Test

The Means Test is a test to determine whether or not you qualify for Chapter 7 bankruptcy.  If you do not qualify for Chapter 7 bankruptcy, then we use the Means Test to determine your disposable monthly income for a Chapter 13.  That disposable monthly income is used to come up with your Chapter 13 monthly plan payment.

The “Means Test” deducts expenses from your gross income.  In most cases, if there is no disposable income, than you would qualify for Chapter 7.  The questions becomes whether you can deduct your college tuition expense.  The simple answer is no.  The reason behind it is that (regardless of what all of your teachers and parents tell us) college tuition payments are not reasonably necessary for the maintenance or support of you and your dependents.  Moreover, paying college expenses for your adult (over 18) children is also not reasonably necessary.

Exceptions for Tuition and School Expenses

Although you cannot deduct college tuition for yourself or your adult children, you can deduct up to a certain amount for education expenses for your minor children.  You will need to speak to a bankruptcy attorney to determine the exact amount as it could change.  Additionally, you can deduct babysitting and daycare expenses for your minor children as well.

Additionally, in a Chapter 13, we take into account your student loans when coming up with a Chapter 13 plan.  In most cases, you will pay student loans as part of the Chapter 13 plan, however, sometimes, people are able to pay their student loan payments outside of the bankruptcy as well.   Your bankruptcy attorney will be able to help you by coming up with a Chapter 13 plan to fit your financial needs.