Filing for bankruptcy is something that affects the whole family. Responsible parents considering bankruptcy think about what it will mean for their children – not just in the short term, but at least a few years into the future.
One big concern for many parents considering bankruptcy is what effect it will have on whether they can attend college. Parents often assume that if they have a bankruptcy on their record, their child won’t be able to apply for student loans. That’s not the case. Let’s look at this more closely.
Federal student aid
Most college students get student loans through the Free Application for Federal Student Aid (FAFSA) program. To qualify for this program, a student must have a legitimate need for financial aid. Parental income is typically the chief consideration. However, their credit score or general “creditworthiness” is not. That means bankruptcy shouldn’t be a factor.
That’s because it’s the student’s responsibility to pay back the loan after they finish college. That’s generally the case for any federal or state program where the student is the borrower.
Other sources of aid
If you’ve been struggling with debt, you’re likely wary about having your child take on student loan debt. That’s why it’s wise, when the time gets closer, to help them explore scholarships and grants.
Scholarships aren’t limited to kids with athletic talent. A history of good grades, a talent in anything from science to the arts, and involvement in community activities can often lead to a grant or scholarship that can lessen the amount of money they’ll need for college. It’s worth looking into these.
If you’re considering bankruptcy, it’s important to know the facts and not rely on misinformation or let unfounded fears prevent you from taking what could be an important first step in reclaiming your financial future. Getting experienced legal guidance is a good place to start.