While bankruptcy can have devastating repercussions to your parents' finances depending on the type of student loan for which you are applying, it may not prevent you from qualifying. If the bankruptcy was within the past five years, your parents may not qualify for a federal PLUS loan without a cosigner, but since this type of loan is for your parents to assist you with your education, it does not have a negative affect on loans that you apply for. You may qualify for a higher unsubsidized Stafford loan if your parents' application for a Plus loan is denied because of the bankruptcy.
Step 1
Contact the college's financial aid office to discuss the types of loans that are available. Tell the counselor the date and reason for your parents' bankruptcy. Even with a bankruptcy, your parents may qualify for a PLUS loan if they have a cosigner. Ask the counselor for the school's financial aid code. You will need it to fill out loan applications.
Step 2
Gather the information you need to complete a Free Application for Federal Student Aid. You will need your Social Security card, driver's license, previous year's tax records, previous year's untaxed income, information about current investments, bank statements and your parents' tax return from the previous year if they claim you as a dependent. You can complete the application online, download the application and mail it in or call 1-800-433-3243 to ask for a paper application.
Step 3
Wait for your Student Aid Report. It can take up to five days to receive your report by email and up to 10 days to receive it through postal mail. Look at your SAR to determine the Expected Family Contribution. Your school uses this number to determine how much financial aid is available for you; it is not how much you will have to pay for your education.
Step 4
Return to the financial aid office to apply for student loans. Your parents should go with you if they are applying for a PLUS loan. Any cosigners must sign the loan documents and provide financial information to receive approval for a loan.
Step 5
Talk with your financial institution about receiving a private loan. If your parents must cosign, their bankruptcy will affect your eligibility for a private loan if it is still on their credit report. However, the longer it has been since the bankruptcy, the less of an effect it has on their ability to qualify as a cosigner. Ask a friend or relative to cosign for your private loan if the bank does not approve your parents.
References
Resources
Tips
- FAFSAs differ yearly. Make sure that you complete the correct application by choosing the right one for your college start date.
- Scholarships can lessen the amount of loans you require. Apply to as many as you qualify for to lessen your financial needs.
Warnings
- If you do not complete all applicable sections of the FAFSA, the government will not process your application. Read over it after completion to make sure you answered everything.
Writer Bio
Specializing in business and finance, Lee Nichols began writing in 2002. Nichols holds a Bachelor of Arts in Web and Graphic Design and a Bachelor of Science in Business Administration from the University of Mississippi.