With student tuition and fees steadily on the rise, more and more people are forced to obtain student loans to pay for their education. Gone are the days of students working their way through school. Now, for most people, student loans are a mainstay on the college prep list.
In most cases, filing bankruptcy will not prevent you from getting federal student loans (Stafford or Perkins). Eligibility for these loans is based on a person’s financial need, not credit worthiness. However, you do need to be current on old student loan payments in order to get a new loan.
Filing bankruptcy could affect your eligibility for a PLUS loan. A PLUS loan is a government loan for graduate students or for parents borrowing to pay for a child’s education. Borrowers who filed bankruptcy in the last 5 years are ineligible for PLUS loans in most cases. Anyone who has had a foreclosure, repossession, wage garnishment, or a 90-day delinquent credit card in the last 5 years will also be unable to obtain a PLUS loan. But look at the bright side – a student whose parents were denied a PLUS loan can be given a larger Stafford loan.