Filing Chapter 7 bankruptcy can feel like hitting a reset button on your finances. But when it comes to financing your education afterward, you might wonder: Can I still get a student loan? The short answer is yes—but the details depend on the type of student loan and your credit history.
Let’s break down how bankruptcy impacts your chances of getting a student loan, what types of loans remain an option, and tips to improve your approval odds.
Chapter 7 Bankruptcy and Federal Student Loans: What You Need to Know
Filing Chapter 7 wipes out most unsecured debts, giving people a fresh start. But federal student loans are usually treated differently. Here’s why:
- Federal student loans like Direct Loans, Perkins Loans, and Stafford Loans don’t require a credit check.
- Your bankruptcy filing doesn’t affect your eligibility for these loans.
- You can apply for federal student aid through FAFSA regardless of Chapter 7 history.
This means even if you recently went through bankruptcy, you generally can still qualify for federal student loans. The government focuses on financial need and enrollment status rather than your credit score or past bankruptcies.
One exception: Federal PLUS loans (Parent PLUS or Grad PLUS) involve a credit check. If you’ve filed bankruptcy within the past five years, you may face challenges getting approved unless you find a co-signer or show special circumstances.
Photo by Ron Lach
Private Student Loans and Bankruptcy: The Real Hurdle
Private lenders look closely at your credit history before lending money. Bankruptcy can cast a long shadow here:
- Bankruptcy stays on your credit report for 7 to 10 years.
- Private lenders see bankruptcy as a red flag and may deny your loan application or offer higher interest rates.
- Lenders want proof you’ve rebuilt your credit and are financially stable since the bankruptcy.
Still, private loans aren’t impossible to get. You’ll increase your chances by:
- Improving your credit score with consistent, on-time payments for other bills.
- Providing a creditworthy co-signer, like a family member with strong credit.
- Showing stable income or assets that reassure lenders.
Before applying for private loans, check your credit report. Fix any errors, and be ready to explain your financial recovery.
Student Loan Debt After Bankruptcy: What’s Discharged?
One common misconception is that bankruptcy clears out student loans. That’s not usually the case:
- Federal and private student loans are generally not discharged in Chapter 7 bankruptcy.
- To wipe out student loan debt, you must prove “undue hardship” in a special court hearing—a tough standard to meet.
- Courts look for persistent financial hardship, efforts to repay, and inability to maintain basic living expenses.
Because this test is hard to pass, very few people get student loans discharged through bankruptcy.
How Bankruptcy Impacts FAFSA and Financial Aid Eligibility
Filing Chapter 7 doesn’t rule out financial aid for college:
- FAFSA eligibility is based on income, family size, and assets, not bankruptcy status.
- You can still qualify for grants, scholarships, and federal student loans.
- If a parent recently filed bankruptcy, they might face challenges getting Parent PLUS loans, but the student can often still take out federal loans on their own.
For students with parents in bankruptcy, there’s sometimes an option to be considered independent for aid purposes, which can unlock more resources.
Smart Steps to Take After Chapter 7 If You Need a Student Loan
Getting a student loan post-bankruptcy is possible with some planning:
- Choose federal loans first — They don’t require credit checks and have flexible repayment options.
- Rebuild your credit — Pay bills on time, keep balances low, and avoid new debt.
- Consider a co-signer for private or PLUS loans — A strong co-signer can offset credit concerns.
- Explore scholarships and grants — These don’t require repayment and can reduce how much you need to borrow.
- Prepare documentation — Show steady income, a budget plan, and financial responsibility to lenders if you apply for private loans.
These steps build trust with lenders and improve the odds of getting the funds you need for school.
Conclusion: Bankruptcy Doesn’t Close the Door on Student Loans
Filing Chapter 7 bankruptcy might feel like a major setback, but it doesn't cut off your chances for federal student aid. While private loans and PLUS loans come with stricter credit checks that could make approval harder, federal loans remain accessible.
With a clear understanding of how bankruptcy affects loan options, a focus on federal aid, and steps to rebuild credit, you can still fund your education. Stay informed, improve your financial health, and keep applying. The fresh start bankruptcy offers can be the first chapter of a brighter future.