How does bankruptcy affect education planning and FAFSA (Free Application for Financial Student Aid)?
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Bankruptcy does not necessarily exclude you from financial aid programs available for your college education.
If you don’t have drug or crime related convictions on your criminal records, you may usually be eligible for at least some financial aid and federal loans, regardless of your bankruptcy status or credit history.
FAFSA is used to primarily determine the Expected Family Contribution (EFC), as a factor in determining the level of Financial Aid available to students. If the student is you, and you filed a Chapter 13, reorganization of debt, bankruptcy, you should contact the financial aid office of the college and ask the Financial Aid Officer for a Professional Judgment to make changes of the FAFSA and change the EFC. This applies for your child attending college as well.
A favorable change in your EFC, can make you, or your child, eligible for more federal grants.
While income levels are captured on the FAFSA application, Bankruptcies are not. The most beneficial approach to the best financial aid programs available will be to complete the FAFSA, and then approach each college to which you apply with the supplementary forms explaining why the EFC is not attainable.
Financial Aid is not generally based on your credit history or your credit score. Even if you have filed for and received discharge of a bankruptcy, you can still be able to qualify for basic levels of financial aid. Even student loans from the federal government are not affected by credit issues. Your current income level is usually the leading factor in financial aid approval.
Working closely with the Financial Aid officers at the college of your choice, can create the best financial aid package for you or your student.
Financial Aid is protected in many ways in the bankruptcy process. Please contact the Sponsor of this essay for guidance with this issue.