Can You Get Student Loans after Bankruptcy?

Many people may wonder if it is possible to get student loans with a bankruptcy. There is not really a clear cut answer because it depends on the nature of the bankruptcy and the types of student loans. However, it is possible to get student loans with a bankruptcy.

Federal Loans

Unless the student has current federal loans in default, he or she should have no problem getting more financial aid through student loans. Since federal loans are never discharged in a bankruptcy because they are insured by the federal government, the student will continue to be responsible for them. If however, these previous loans are in default, the student will have to work to resolve the delinquency or default before more loans will be given.

Private Loans

Private loans are credit based, not need based like the federal loans are. With a private loan it is up to the individual lender to determine whether or not to extend a loan for education purposes. While a private lender may deny a student on basis of the previous bankruptcy, another lender may welcome the student. Whether or not a private loan is a possibility after bankruptcy depends on what qualifications the lender has. For instance, some may only look at the credit score. If the bankruptcy was not too recent, the credit score may have rebounded significantly. The existence of previous student loans that are paid as agreed--which display that way while in deferment and forbearance--will help the credit score. Don't expect to find a private lender who will help with student loans for a while, at least until the bankruptcy drops from your credit report in 7 to 10 years.

Options If Federal Loans Are Not Enough

If federal loans are not enough to cover the cost of school, do not stress just yet. Students who are ineligible to receive private funding due to credit issues may be able to reduce their out of pocket expenses by reducing the number of hours they take each semester. While it may take longer to go to school this way, it makes it easier to pick up a part time job which will work even better to help offset costs of books and lodging while in school. For instance, a student who enrolled in a one year program full time may have had to pay $310 a quarter out of picket. By extending the program just one quarter and going part time, the same student was able to get $300 back each quarter to help with books. When faced with this decisions, students need to consider that drawing it out just a little longer is better in the long run than it is to completely avoid going. With it taking longer to complete the program, there is a lighter workload, which allows for more relaxation or time with the family.


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