Loan Issues - Bankruptcy

You included one or more student loans in a bankruptcy, and the Department of Education has suspended your federal student aid eligibility until it can be reviewed.

If none of the student loans included in the bankruptcy were in default:

  • You do not need to do anything.
  • This requirement should be resolved within the next 2 weeks.

If one or more of the student loans included in the bankruptcy were in default:

We need a “clearance letter” from the loan holder stating that

  1. The loan is dischargeable (rarely the case) or that
  2. The default should no longer prevent you from receiving federal financial aid.

When the loan is determined to be dischargeable or the default is resolved, ask your loan servicer/lender to fax us a clearance letter at 316-978-3396.

  • This requirement cannot be cleared until we receive a letter from the holder of the loan.

When a loan is dischargeable:

In order to have a loan discharged, a judge must determine that repaying the loan would be an undue hardship. Since student loans are not dischargeable under bankruptcy, this if very rare.

Note: If you want to pursue this, contact your attorney.

Default should no longer prevent you from receiving federal aid:

Defaulted student loans can be resolved in the following ways if you meet the requirements for the option:

  • Pay off the defaulted loan.
  • Consolidate all defaulted loans, which pays the defaulted loans off with a larger consolidation loan
  • Make payment arrangements with the loan servicer followed by 6 on-time monthly payments. The loan is still in default but does not prevent you from receiving financial aid.
  • Making 9 qualifying monthly payments to rehabilitate the loan. This removes the default.

Note: If you want to pursue one of these options, contact your loan servicer.

You can find your student loan history, the status of each loan, the loan servicer or lender and their contact information at studentaid.gov.