It’s a common occurrence that many people end up in a financial dilemma that leads them to file for bankruptcy. Many California consumers can be affected when it comes to student loans after filing for personal bankruptcy. Usually, it takes up to five years from the time of discharge for student loans to be approved.

In regard to a student filing bankruptcy, this can pose an issue if an individual is intent on attending graduate school. The student will not be eligible for student loans for a period of five years. Since a majority of graduate schools are pricey, graduate student loans are needed to cover most of their expenses. There is still light at the end of the tunnel, though, if the graduate student is able to secure a co-signer for the PLUS loan program.

Students of parents who have declared bankruptcy will not be able to benefit from private student loans until 10 years have passed. Understandably, this does not look too promising for the student borrower, but there is an upside to this, and students may actually be at more of an advantage. A student stands to gain an additional $5,000 in government loans at a decreased interest rate due to their parent’s denial.

A personal bankruptcy filing can sometimes hinder someone from obtaining student loans for several years. However, bankruptcy is often a saving grace in cases where a person is faced with a large amount of adverse financial issues. With proper budgeting and rebuilding of a solid credit profile, California consumers can find themselves obtaining loans within just a few years after their debts have been discharged.

Source: Huffington Post, How Bankruptcy Affects College, Grad School Financing, Kelsey Sheehy, Nov. 19, 2013