You can get a student loan after you file for bankruptcy. According to the Unified Student Loan Policy Common Manual of April 2005, Chapter 5, paragraph 5.6, the Bankruptcy Reform Act of 1994 prevents a school or lender from denying a federal loan or grant to an applicant solely because he or she has filed a bankruptcy petition.
I frequently meet with clients from Dalton, Calhoun, Dallas, Cartersville, Hiram, Rome and Douglasville Georgia who are concerned that they will not ever be able to continue their education if they file for bankruptcy. The truth is that bankruptcy will not prevent you from pursuing your education dreams. I’ve had clients who were able to get student loans while they were in active Chapter 13 bankruptcy cases. Any loan that is obtained during a Chapter 13 bankruptcy, must be approved by the Trustee.
For students who are applying for financial aid, I would think that a bankruptcy would show the college that you are truly in need of the financial aid.
It is important to note that student loan debt is virtually impossible to discharge in any type of bankruptcy. As a consequence, student loans have been easy to obtain in the past. The scary aspect of student loans is that if you borrow too much, you could be putting yourself into economic slavery. I have some lawyer friends who claim that they will be paying on their student loan debt until the day they die!
Before taking on student loan debt, you should consider whether the potential income you are going to earn will be enough to pay off the student loan over a reasonable time. I know quite a few college graduates who can’t get a job making more the $10 per hour. What is the total amount you intend to borrow to complete your education? What is the salary expectation after your graduate? How many of the graduates from the program you are considering find jobs within six months of graduation? Can you talk with some of the graduates before you enroll?
Student loan debt is scary. Be careful!