Need to get a student loan after a bankruptcy filing?  For those considering a bankruptcy case filing, this is a big question.  Will they be eligible to get a student loan after filing for bankruptcy?  The answer is:  it all depends on what you’re looking for.   Here’s what you should consider.

Federal Student Loans

For students applying for college, the first type of student loan to consider is a federal loan.   I strongly, strongly urge you to consider only federal loans!!  Why?  Because federal loan programs offer a variety of repayment options.   Read more about that here!   Private loans do not.

Generally speaking, federal loans will not be a problem to obtain for anyone who has a credit problem.   In fact, federal lenders do not look at credit scores, and nor do they ask for co-signers.   The reason that your credit-worthiness is not a concern to the Feds is because they know it’s virtually impossible to wipe them out (they can garnish wages for folks who fall into default; they can intercept tax refunds, etc.).  So, federal loans are not to be trifled with, but on the other hand, they do have much better repayment terms.

Private Student Loans

It all depends.  First, as I have written before in this Blog, I do not ever encourage someone to enter into a private student loan.   I will do all I can to discourage my own kids from ever getting one.

Nevertheless, you likely will be able to get a private loan.  The reason, as I have written before, is that your credit rating will likely be better after your bankruptcy is over.

Parent Student Loans

If you’re a parent of a potential student, then if you’re currently in a Chapter 13 case, yes, you can apply to the Bankruptcy Court for permission to get a student loan.  Remember that one of the restrictions under the Bankruptcy Code is that you must seek Court approval if you wish to borrow money.   I have never seen a Bankruptcy Judge deny a parent who wished to help a child with a student loan.

Often, I’ve been surprised to hear from parents who are in Chapter 13 and who’ve been denied on Parent Plus loan applications, only to find that their college student children have then been offered better loan and grant offers by their colleges due to the fact that the parents are not able to borrow.

If you have questions or comments, please let me know below!