<p>Alright, so today my father declared bankruptcy... Obviously this is not a good situation for the family, and I'm concerned about its impact on my financial aid situation for next year. How does this type of thing impact one's financial aid package from a school? Does it even have any bearing at all?</p>
<p>If the bankruptcy was the result of discretionary spending ... that is, spending too much on stuff ... the debt will NOT be taken into consideration. All the money that is earned will be considered as available income, and the amount that must be paid out monthly as a result of the bankruptcy ruling cannot be taken into consideration. We just had a girl come in yesterday about that ... her mom makes lots of money, but she only actually clears $500/pay after taxes and bankruptcy payment. She wanted us to consider only her mom's $500/pay, which we could not do. We had to consider the much-larger amount she would have had if she weren't paying off the bankruptcy debt.</p>
<p>If, however, the bankruptcy was the result of something like very high medical bills, the financial aid office may be able to assist your family with a special circumstances professional judgment. You might then be eligible for more gift aid (such as Pell or SEOG) than you might otherwise be. There is no guarantee, since this is professional judgment, but you should definitely check it out. Call your aid office and talk to them.</p>
<p>How this affects you is hard to say. You cannot put the bankruptcy on the FAFSA. It must be a special appeal to the school aid office, and they will decide how to treat it. If you go to a school that meets a high percentage of need, you may get more money than you would at a school that doesn't have a lot of grant money. Again, it's hard to say, though. </p>
<p>One thing that won't happen: you won't be turned down for federal Stafford student loans. The only loan you wouldn't be able to get is a parent PLUS loan. However, if your parents apply for the PLUS & are turned down (which they would be if bankrupt), you can borrow $4000 (fr/soph) or $5000 (jr/sr) additional unsubsidized Stafford loan. That is in addition to the total sub/unsub Stafford for year in school (up to $5500 fr, $6500 soph, $7500 jr/sr).</p>
<p>kelsmom, thanks for the response. The bankruptcy was due to discretionary spending. How would I go about making a special appeal to the financial aid office?</p>
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<blockquote> <p>The bankruptcy was due to discretionary spending. How would I go about making a special appeal to the financial aid office?>></p> </blockquote>
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<p>You would contact the financial aid office at each school and send them the information.</p>
<p>But unless I misread something...discretionary spending is not what Kelsmom says is most likely to help you. The reality is that is something that could have been controlled. </p>
<p>Special circumstances that happen due to situations that were NOT caused by the party (lay off from job, very high medical expenses) are the types of things that financial aid offices tend to view favorably when a student seeks a special circumstances consideration.</p>
<p>My understanding is that when you seek a special circumstances consideration, you must bring with you documentation of why this is happening. You would bring things like your medical bills, lay off slips, etc. What do you bring for discretionary spending....over used credit card bills, a higher that you could afford mortgage payment, new car payment slips? </p>
<p>I'm not saying you shouldn't try...it's always worth trying. But discretionary spending is in the control of the spender. High medical bills or a job layoff are not.</p>
<p>If you want to try for a special circumstances adjustment, contact the school's financial aid office to ask what info they need. Every school is different.</p>
<p>You will most likely be turned down, but you can try.</p>