Will bankruptcy affect a student’s eligibility for students loans?
Whatever the circumstances behind the bankruptcy, the student should talk with the financial aid administrator at the school he/she plans to attend, and explain the situation. The financial aid administrator may be able to help the student to certain loan programs or lenders.
In general, with Federal Loans bankruptcy will have no impact on eligibility. Title IV grant or loan aid may not be denied to a student who had filed bankruptcy solely on the basis of the bankruptcy. As long as there are no delinquencies or defaults on student loans currently in repayment, the student should be eligible for additional federal student loans. However, if some of the student’s federal student loans are in default, the student will not be able to get further federal aid until he/she resolves the problem.
Parents or graduates who apply for a PLUS loan or a Grad PLUS loan may be denied a PLUS loan if they have an adverse credit history. An adverse credit history includes having had debts discharged in bankruptcy within the past five years. Parents would be eligible with an endorser or the student may be eligible for an increased unsubsidized Stafford loan.
