While you may have saved for your child's higher education and did everything by the books financially, job loss, divorce, medical emergencies and other unexpected events may have forced you to file for bankruptcy. While bankruptcy gives you a chance to start over financially, you may wonder how the filing will affect your child's future. Will it hurt his or her chance of obtaining federal financial aid or student loans to go to college in Virginia?
According to College Coach Insider Blog, bankruptcy should not affect your child's ability to obtain state, federal or college-based student aid. Nor will your child receive more or less aid because of your default. If eligible, your child should receive his or her entitlement of $5,500 to $7,500 in federal Direct Stafford Loans.
However, bankruptcy may affect your ability to obtain loans on your child's behalf, or for your child to obtain loans with you as a co-signer. For this reason, you should bring your bankruptcy to the attention of your student's choice college. If you cannot obtain a loan, you may have to file a request for special consideration for institutional loans or additional grants.
That said, bankruptcy should only affect your ability to obtain a loan if you filed for bankruptcy within the past five years. If you receive a denial notice, you have three options. The first is to petition the denial based on mitigating circumstances. The second is to obtain a co-signer for the financing. The final option is to allow your student to take out a loan in his or her own name.
This post is meant to be purely educational. It should not be construed as legal advice.