Getting Student Loans After Bankruptcy

If you are having financial problems, you probably notice the advertisements telling you that college graduates make more money on average than those who did not go.  While you would probably love to make more money, you may be wondering how you can afford to go back to school.  Traditionally, you may have considered a student loan, but if your credit score has been affected by bankruptcy, would you qualify?

There are two different categories that student loans fall into.  There are public student loans, sponsored in part or in full by the government.  On the other hand, there are also private student loans that are given by private companies.  The rules for these loans vary.

When private companies loan money, their goal is to get that money back, plus interest.  To this end, they will check your credit score before determining if you are worth the risk.  With bankruptcy on your record, you may not get approved.

Even if you do find someone who will give you a loan under these circumstances, you need to be careful of interest rates.  The lower your credit score, the higher your interest rates are apt to be.

The government, on the other hand, bases the loans it awards on need rather than merit.  Therefore, having filed for bankruptcy does not automatically disqualify you from receiving these loans.  If you qualify for other aid, the loans should be available as well.

This also applies to otherwise private institutions that have student loan programs that are insured or guaranteed by a federal program.

The unfortunate downside to student loans guaranteed by the government is that they may not always be enough.  There may be a difference between the amount you qualify for and the amount they lend you.  And since most private institutions would not be willing to give you a loan, you could end up with nothing to supplement the government loans.

If you find yourself in no position to continue school even if you believe it will better your financial situation, there are options.  While private institutions may be out of the questions, government student loan programs are based on need and could help you.  If you defaulted on a previous federal student loan, that may be a different story.  But if you are applying for a student loan through a government insured program where you would otherwise qualify for aid, bankruptcy should not present a problem when getting the loan.

Kari Johnson

Kari Johnson is a first-year student at the University of North Carolina at Chapel Hill, having lived in North Carolina her whole life. At UNC, she is a declared Religious Studies major, and intends to study some form of writing as well during her time and Chapel Hill. She plans to graduate in 2014, after participating in undergraduate research and a study abroad program.

Kari discovered the magic of writing early, in elementary school, and has devoted every spare moment to it since. She writes fiction for her own amusement, and recently began writing articles for The Daily Tar Heel in Chapel Hill. Besides writing, she loves spending time with friends and family, reading, and drinking coffee. She defines herself based on her faith in God, her family roots, and her dream of one day publishing a best-selling novel.

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