Further your education is a valiant way to get farther in the world. You can grow your skill set, discover a new one, or completely shift your career field. However, those who have weathered bankruptcy wonder if educational loans, like those you can secure through FAFSA, remain an option for them.
Good news: parents or individuals who want a loan to further their education can get a loan through FAFSA, even if they have gone bankrupt in their past. Furthermore, if you’re currently drowning in debt, the bankruptcy attorneys at Dethlefs Pykosh & Murphy have the practice area and experience to help recognize and resolve the situation.
Can You Apply For FAFSA During Bankruptcy?
Thanks to the Bankruptcy Code, most borrowers are protected from discrimination. If you recently, or plan to, file for bankruptcy, you can still apply for FAFSA.
In the situation of children whose parents filed for bankruptcy, that filing does not affect the child’s ability to apply for public loans. Similarly, if an adult who has filed for bankruptcy chooses to go back to school for an advanced degree and seeks loans to help pay for it, they also should be able to apply.
One major caveat to this answer lies in the type of sought-after loans. If you’ve personally filed for bankruptcy, left any sort of student out of it, and have defaulted on those loans, you generally will not be able to receive additional student aid until you resolve the default. In addition, students seeking to take out a PLUS loan with adverse credit history may be denied.
Finally, private loans remain a complex issue and the general rule of thumb is that bankruptcy in the last seven to 10 years may affect the application process for the loan. However, like public loans, private loans for a student usually should not be affected by a parents’ bankruptcies.
How To Apply For FAFSA During Bankruptcy
Consider following our step-by-step guide for how to apply for FAFSA during bankruptcy.
- Log onto https://studentaid.gov/. If it’s your first time on the website, you’ll want to create an FSA ID so you can keep track of your application, benefits summary, and more.
- Gather all your documents. When applying for FAFSA, you’ll need several official and helpful documents ready to fill in the required questions. Take note of the FAFSA application you’re filling out, as the 2024-2025 application has different document requirements from the 2023-2024 application. The 2024-25 documents include (taken straight from the FAFSA requirement page):
- Your parents’ social security numbers (only if you’re a dependent student).
- Tax returns.
- Records of child support received.
- Current balances of cash, savings, and checking accounts.
- Net worth of investments, businesses, and farms.
- Complete the application. Do so as soon as possible so you’re considered for every opportunity you can be. Completing early also ensures you’ll have time to update documents or provide additional context to colleges or universities who may need more information from you.
- Read your submission summary and student aid index. Once processed, your FAFSA application will come back to you in an email with any next steps you need to take. If you’ve completed everything and don’t need to provide additional information, you’ll also find a figure called the Student Aid Index. This number essentially determines your eligibility for federal financial aid programs.
After applying for FAFSA and receiving your summary, it’s time to confirm the financial aid you’re electing to take, look for more scholarships, and consider work study programs.
Types of Financial Aid to Get After Bankruptcy
The loans you apply for (and hopefully receive) after bankruptcy will change just a bit. Here are some handy tips and steps for choosing the best types of financial aid after declaring bankruptcy.
- If you’re hoping to get a credit-based loan, analyze your credit report extensively and apply for the loans that have parameters you match. To ensure you’re operating off of the most accurate information, secure your credit reports from the three major lenders: Experian, Equifax, and TransUnion.
- Review your FAFSA-generated Student Aid Report. This will give you a general idea of how much you can borrow, and what else you’ll need to do.
- Search out scholarships and work-study. Depending on the terms of the scholarship or work study program, this type of aid may suit your lifestyle and financial situation more.
We’ve Got Your Bank When Bankruptcy Strikes
If you’re a child or individual with bankruptcy in your past, educational loans aren’t out of reach for you. Regardless of your circumstances, it’s best to consult with your potential school’s financial aid office to discuss your unique circumstances and find a solution tailor-fit to your needs. When you need help relieving and recovering from bankruptcy, turn to the experts at Dethlefs Pykosh & Murphy.
