May 18, 2020
Question: I am a 20 year old college junior. I am considered a "dependent" student when filing for financial aid. Recently, my parents filed for bankruptcy, so I am now afraid that this will affect my eligibility for student loans, since my mother is a co-signer. My solution is to file as an independent student next year so I would be solely responsible for my loans. Is this possible? Please advise me on what I should do and how this will affect me. I plan to go to law school after my bachelors as well. Thanks!!
Unfortunately you are not eligible to be independent unless you are a military veteran, are married, or have a child. (If you are a ward of the court or are over 24, you would qualify as well, but you are neither.)
So your first step is to make an appointment with one of the financial aid officers at your college to explain this change in your circumstances. Don't be shy or embarrassed about the details. Financial aid folks are like doctors ... they've heard every story one can imagine!
Meanwhile, I turned to Ann Playe, a colleague of mine and former associate director of admission and financial aid at Smith College, who offered this information:
If your parents have been turned down for the PLUS loan (a common one for parents, who apply through their child's college), then you will be eligible for an additional unsubsidized loan in your own name.
But if your loans are private loans (i.e, through a bank or other lender, not your college) then you won't be able to get private loans unless you can find other co-signers --not your parents, since they have filed bankruptcy.
As a junior or senior, you should be eligible for a total of $7500 in Federal loans. If your parents are denied a PLUS loan, then you, yourself, become eligible for an additional $5000 in "unsubsidized loans," bringing your eligibility for all Federal loans--for which you will not need a co-signer--to $12,500.
If you need money in addition to this $12,500 and you aren't given grant aid (the good stuff that doesn't have to be paid back) by your college, even after explaining your changed circumstances, then you will have to find someone with good credit who can co-sign for private loans to make up the difference between the $12,500 and the cost of your education.
Later, as a law student, you will have another option that is not open to you as an undergraduate. In addition to being able to borrow up to $20,500 ($8,500 is the maximum subsidized part of this total) in Federal student loans, you can ALSO borrow the remainder you need to meet the cost of education in a Graduate PLUS loan which does not involve a parent signature.
I know this sounds confusing, so your financial aid office is where you must go first for advice on how to proceed.
These obstacles in the road to your future will be challenging, but they are not insurmountable. Don't give up on your plans or your dreams, even if attaining them seems daunting right now.