Can You Get Student Loans While in Chapter 13 Bankruptcy?

Quick Facts

• Filing for bankruptcy doesn’t stop you from getting federal student loans, grants, or work-study. You can still submit the FAFSA and qualify for aid during and after bankruptcy.
• Private student loans are harder to qualify for after bankruptcy. Most lenders check your credit history and often see bankruptcy as a red flag. They’ll consider you unreliable. If you’ve had a bankruptcy in the past few years, you may need a cosignerCosignerA person who signs a loan agreement alongside the primary borrower and becomes equally responsible for repayment. Cosigners are common on private student loans when the student has limited credit or income history. to get approved.
• Parents may be denied Parent PLUS Loans if they have a recent bankruptcy discharge, but they can still qualify by completing PLUS Credit Counseling or applying with a cosigner.

Overview

Filing for bankruptcy doesn’t block you from receiving further federal student aidFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers.. You can still qualify for most federal student loans, including Direct Subsidized Loans and Parent PLUS Loans, even if you’re in an active bankruptcy proceeding or recently received a bankruptcy discharge.

But if you’re applying for Parent PLUS or Grad PLUS Loans, a bankruptcy court record can trigger an adverse credit history flag. To move forward, you may need to add a creditworthy cosigner or complete PLUS Credit Counseling through the Department of Education.

Federal law protects your right to access federal financial aid, ensuring bankruptcy filers aren’t unfairly penalized for past bankruptcies.

Private student loans, personal loans, and borrowing from credit unions often have stricter requirements and could demand a cosigner or court approval, especially in Chapter 13 cases.

This guide breaks down how bankruptcy affects your eligibility for student aid, staying eligible during a bankruptcy proceeding, and options for student loan repayment after your case.

Related: Why Can’t You File Bankruptcy on Student Loans?

Before Filing for Bankruptcy

Filing for bankruptcy won’t automatically cut you off from federal financial aid. If you’re considering bankruptcy and worried about losing access to student loans or grants, here’s what you need to know:

• FAFSA Eligibility: You can still submit the Free Application for Federal Student Aid (FAFSA). Bankruptcy isn’t a factor in FAFSA eligibility, and the federal government doesn’t ask about previous bankruptcy cases when awarding aid.
• Federal Grants & Work-Study: Programs like Pell Grants, the Federal Supplemental Educational Opportunity Grant (FSEOG), and work-study remain available as long as you meet financial need requirements.
• Federal Student Loans: You remain eligible for most federal student loans, including Direct Unsubsidized and Subsidized Loans, and Stafford Loans. These loans don’t require a credit check.
• Parent PLUS & Grad PLUS Loans: These loans involve a credit check. If your financial situation includes an active or recent bankruptcy, it could flag an adverse credit history. You can still qualify by adding a cosigner (endorser) or completing PLUS Credit Counseling through the Department of Education.

Related: How to Get Student Loans for Parents With Bad Credit

During Bankruptcy (Chapter 7 and Chapter 13)

Filing for bankruptcy doesn’t stop you from getting federal student loans or financial aid, but the process works differently depending on whether you file under Chapter 7 or Chapter 13.

Chapter 7 BankruptcyChapter 7 BankruptcyA form of federal bankruptcy that liquidates nonexempt assets to pay creditors and discharges most remaining unsecured debts. Student loans are not automatically discharged in Chapter 7 and require a separate adversary proceeding. (Liquidation)

• Aid Eligibility: You can still submit the FAFSA and qualify for federal student loans, grants, and work-study while your case is active.
• No Court Approval: You don’t need court approval to take out new federal student loans during Chapter 7.
• Loan Payments: Filing triggers an automatic stay, pausing payments and collection efforts on existing student loans. But interest will continue to build while your case is active.

Chapter 13 BankruptcyChapter 13 BankruptcyA form of federal bankruptcy in which the debtor follows a three-to-five-year court-approved repayment plan. Student loan balances remaining after the plan are not automatically discharged and require a separate adversary proceeding. (Repayment Plan)

• Aid Eligibility: You can still qualify for federal student loans, but you may need court approval before taking on new debt.
• Court Approval Process: Your bankruptcy attorney typically files a motion explaining why the loan is necessary and how it fits into your Chapter 13 plan payments. A bankruptcy trustee will review and approve the request before the judge signs an order allowing you to borrow the loan.
• Parent PLUS Loans: These loans involve a credit check. If a recent or active bankruptcy triggers an adverse credit history flag, you can still qualify by either adding an endorser or completing a counseling course.
• Loan Payments: Student loan payments included in your Chapter 13 plan are often reduced but can still accrue interest during the process.

Related: Can You File Bankruptcy on Parent PLUS Loans?

Legal Protections

Filing for bankruptcy doesn’t stop you from getting additional federal student loans—and bankruptcy law protects you from being denied aid just because of a past filing.

Under 11 U.S.C. § 525(c) of the U.S. Bankruptcy Code:

• Schools, lenders, and other governmental units can’t deny you federal grants, loans, or work-study because you filed for bankruptcy.
• This protection applies both during and after your case, even after a bankruptcy discharge.
• It covers all federal aid, including Direct Loans, Parent PLUS Loans, Grad PLUS Loans, and programs like the Perkins LoanPerkins LoanA low-interest federal student loan for borrowers with exceptional financial need, issued by schools under a now-discontinued program. New Perkins Loans have not been made since 2017, but many existing balances are still in repayment. Program.

If you’re ever denied federal aid due to a bankruptcy filing, you have the right to challenge that decision under federal law.

After Bankruptcy

A bankruptcy discharge doesn’t stop you from accessing federal aid for higher education. You can still submit the FAFSA, qualify for grants and work-study, and borrow education loans like Direct Subsidized and Unsubsidized Loans—none of which require a good credit score.

For Parent PLUS and Grad PLUS Loans, a recent bankruptcy within the last five years could trigger an “adverse credit history” flag. If that happens, you’ll need to take additional steps to borrow those types of loans.

Filing bankruptcy also won’t prevent you from working toward a brighter financial future—you can still pursue federal aid for undergraduate degrees, graduate students, and certificate programs.

Loan Consolidation After Bankruptcy

You can consolidate your federal loans after bankruptcy to simplify payments, but it won’t:

• Remove the bankruptcy from your credit report.
• Erase defaulted loans included in the bankruptcy.
• Reset your loan status.

But consolidation can help if you’re working toward a satisfactory repayment plan under an income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plan plan or aiming to regain eligibility for Federal Student Aid.

Unpaid Tuition and Bankruptcy

Unpaid tuition may or may not be discharged in bankruptcy—it depends on how the debt was structured:

• Likely Dischargeable: Standard tuition bills not tied to a formal loan agreement, such as unpaid fees from a previous term.
• Harder to Discharge: Tuition tied to a promissory notePromissory NoteThe legal contract a borrower signs to receive a loan. It sets out the amount borrowed, the interest rate, repayment terms, and the borrower's obligations to the lender., private tuition payment plans, or debts treated like personal loans.

If you’re unsure whether your unpaid tuition qualifies for discharge, check your financial aid agreement for loan terms or consult your bankruptcy attorney.

Private Student Loans

Filing for bankruptcy can make it harder to qualify for private student loans since most private lenders run your credit before approving your loan application and view bankruptcy as a negative mark. But you might still have options in some situations:

• Chapter 13 Filers: If you’re in an active, court-approved Chapter 13 plan and repaying 100% of your debt, some lenders may be more flexible.
• Get a Cosigner: Adding a cosigner with a strong credit profile can improve your approval chances.
• School Partnerships: Some schools partner with private lenders open to working with borrowers who have a bankruptcy history.

Parental Impact on Private Loans

• Parents Filing Bankruptcy: Your bankruptcy won’t affect your child’s ability to apply for private loans unless you need to cosign.
• Cosigning: If a parent with a bankruptcy history cosigns, the lender may either deny the application or require a stronger cosigner with good credit.

Related: Can Private Student Loans Be Discharged in Bankruptcy?

When Student Loans Can Be Discharged in Bankruptcy

While discharging student loans through bankruptcy is rare, it can happen in specific situations for both private and federal loans.

Private student loans meet the eligibility requirements for discharge if:

• The loan wasn’t used for educational expenses.
• The loan exceeded your school’s official cost of attendance.
• The loan was issued directly to you, not through your school’s financial aid office.

Federal loans require filing a separate legal process called an adversary proceedingAdversary Proceeding (AP)A separate lawsuit filed within a bankruptcy case, required to seek discharge of student loans. The borrower files the AP against the loan holder and asks the court to find undue hardship. where you must prove undue hardshipUndue HardshipThe legal standard a borrower must meet to discharge federal student loans in bankruptcy under 11 U.S.C. § 523(a)(8). Courts apply different tests, most commonly the Brunner Test or the Totality of the Circumstances Test.. To qualify, you’ll need to show:

• Repaying the loans would prevent you from maintaining a minimal standard of living.
• Your financial situation isn’t likely to improve.
• You’ve made a good faith effort to repay the loans.

Since the standard for discharging federal loans is difficult to meet, programs like income-driven repayment plans or loan forgiveness are often more effective ways to manage student debt.

Related: Can You File Bankruptcy on Student Loans?

Loan Forgiveness Options

Since discharging federal student loan debt through bankruptcy is difficult, loan forgiveness programs often offer a clearer path to eliminating student debt.

• Income-Driven Repayment Forgiveness: Designed for federal student loan borrowers, IDR plans lower your monthly payment based on income and family size, with loan forgiveness after 20-25 years of qualifying payments. Starting July 1, 2024, borrowers in Chapter 13 bankruptcy can receive credit toward forgiveness while making court-approved payments, even if no direct student loan payments are made.
• Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer.: Forgives the remaining balance on Direct Loans after 120 qualifying payments while working full-time for a qualifying government or nonprofit employer.
• Teacher Loan ForgivenessTeacher Loan ForgivenessA federal program that can forgive up to $17,500 of Direct or FFELP loans for teachers who complete five consecutive years of full-time teaching at a low-income school or educational service agency.: Forgives up to $17,500 on Direct Subsidized and Unsubsidized Loans for teachers working full-time for five consecutive years in a low-income school.
• Closed School DischargeClosed School DischargeA federal loan discharge available to borrowers whose school closed while they were enrolled or shortly after they withdrew, before they could complete their program of study.: If your school closed while you were enrolled or shortly after you withdrew, you may qualify for full loan cancellation.
• Borrower Defense to RepaymentBorrower Defense to RepaymentA federal process for discharging Direct Loans when the school misled the borrower or engaged in misconduct related to the loan or the educational services it promised.: If your school misled you or engaged in misconduct, you could qualify for loan forgiveness by filing a borrower defense claim.

These forgiveness programs often offer a more practical way for federal student loan borrowers to manage student loan debt than bankruptcy. If you’re unsure which option fits your situation, consider consulting a student loan professional for guidance.

Related: How to Apply for Student Loan Forgiveness

Bottom Line

Filing for bankruptcy won’t cut off your access to most federal financial aid. You can still qualify for grants, loans, and work-study, even during a Chapter 13 bankruptcy.

If you’re struggling to pay for school, consider finding a cosigner or exploring private student loanPrivate Student LoanA student loan issued by a bank, credit union, or other private lender rather than the federal government. Private loans generally lack federal protections like income-driven repayment and broad forgiveness programs. options with lenders who accept borrowers with a recent bankruptcy filing.