Legal Question in Credit and Debt Law in Pennsylvania

Collection/Repayment of College Tuition

Our son had to drop out of Medical School because of serious health and family problems. When registering for classes he signed a 6% interest note for unpaid portion of tuition. He did not expect that his life would change so completely for the worse. He tried to negotiate the repayment terms with the School, but School forwarded his case to collection attorneys. Citing School policies, the collection attorneys add interest at 18% penalty rate to the unpaid amount and tell our son that he needs to repay entire tuition, 18% interest, late charges and their fees in one installment or they will file a suit against him in the Court of Common Pleas. They claim that the Court Judgement will reduce the interest rate to 6%, the highest interest rate allowed in Pennsylvania. Medical School and Collection Attorneys are located in Philadelphia, PA. We live in Arizona. Our son lives in Florida where he found low paying job. He has many serious financial obligations, among them child support for his two young sons. He is very close to bankruptcy, but is trying to repay his debts. However, he desperately needs some cooperation from the School!

We never had a problem like this before and will appreciate all advice you can give us!


Asked on 5/09/07, 6:17 pm

2 Answers from Attorneys
John Gibson John W. Gibson, Esquire

Re: Collection/Repayment of College Tuition

School "policies" do not govern interest rates, the note that he signed governs the interest rate that is payable. You son may have some defenses to the action based on the Truth in Lending Act if the 18% is interest not provided for in the note. However, it may be that the 18% is listed as attorneys' fees in the note.

It is not clear to me whether or not this is a "student loan" since it was for tuition directly due to the school. It may be that this is dischargeable in bankruptcy. Universities are usually very receptive to working out repayment terms. It is probably worthwhile for your son to send the attorneys a repayment proposal in writing. Anytime an attorney receives an offer to resolve a case he or she must present the offer to the client. It may be that the University is easier to deal with than the collection attorneys.

It is probably a good idea for your son to contact an attorney local to his area to decide whether bankruptcy is an option.

Read more
Answered on 5/10/07, 10:55 am
Glenn Brown Real World Law, P.C.

Re: Collection/Repayment of College Tuition

You did not provide numbers so t is hard to give specific advice. However your sons situation may be one they had in mind when they developed the bankruptcy law.

Since he lives in Florida you may want to assist him in talking with a bankruptcy attorney located in Florida.

While student loans and child support are generally not dischargable some of his debt may be dischargable and the payments of most of it can be regulated by the court.

Good luck to him.

Read more
Answered on 5/09/07, 6:37 pm


Related Questions & Answers

More Credit, Debt and Collections Law questions and answers in Pennsylvania