Bankruptcy discharge & Student Loans

No good unraveling scandals today, so we'll post some stuff about student loans and bankruptcy -- we get questions about this a lot.

Short answer is: nope....not gonna happen. If you file bankruptcy your Title IV student loans will NOT be discharged. Got a bunch of loans outside the Direct or FFEL program? Well, private ed loans are also NOT dischargable as a result of the October 2005 bankruptcy reform legislation.

So there we have it: if you file bankruptcy, your student loans will tag along and be there to haunt you for quite some time. This is why it's so important to review the terms of the loans you are signing up for. Sure the loan documents signed today don't seem to have any commitment, after all, you generally don't have to make any payments for one to four years. But you are obligating yourself to a serious commitment. Each year, add up how much you will be paying monthly based on the debt you are accumulating. You can quite easily put yourself way behind the 8 ball even before graduating from college.

Our point is, don't use loans as a bank withdrawal, there's a consequence to borrowing. Exhaust all other options. And we mean scholorship searches, grants, work-study, and off-campus jobs. Sure all that's a lot of hard work, but the less debt you leave with after graduation, the more rewarding your life will be.

Student loans are a fantastic vehicle that enable the underwriting of tuition, but should be employed responsibly and with foresight.