Bankruptcy & student loans after BK

[HopeinHorizon]

I am taking masters courses, and I just received my first loan disbursement, and I filed bankruptcy 10/05 and discharged 2/06...

Student loans aren't credit based, you can get them up to the eligible amounts...

Sinking- My mother had really bad credit when I was an undergrad, and because of this she applied for PLUS loans, and once the school got a letter of denial they deemed me an independent student instead of dependent so I could get more loans... Dependent first year you can get 2265, but because my mom was not eligible to help me, they gave me (in my name only) 4000 more...

Don't worry, if you don't qualify they will allow your son to qualify for more. Call the Financial Aid office and ask what process you need to take to show that you wouldn't be approved for the PLUS loan so that your son can be deemed independent (only when it comes to loans)... he still has to include your income on the FAFSA...

[SinkingFast]

That won't make him to be considered "independent" all together for everything would it??

I ask because he has medical insurance thru us still as a dependent. Also, car insurance and other things are available to him cheaper as a dependent than if he went it solo.

Don't wanna screw up other things just to get more money to go to college.

He's doing fine, financially in the 2 year school/College because the cost for tuition is relatively low and he works enough hours to pay it so far.

We're really looking to the future when he transfers to the 4 year Univ. to finish his degree. And when Child #'s 2 and 3 are heading off to school as well.

[HopeinHorizon]

No, Sinking...

I had to fill out my FAFSA every year and include my mom's HUGE salary, so I was never eligible for grants... My mom carried me on her insurance policy until I was 23, since I was a student and she had government insurance (that is a blessing)...

Insurance goes if he is a dependent of you on your federal taxes. As long as you are claiming him on your federal taxes using the following rules, he is allowed to reap the benefits of your medical/dental providers. My mother carried me on car insurance also, because she was on th title of the loan, she could carry me until I was 80 had I kept that same car. Geico (the company we had when I was an undergrad) just wanted to make sure that it was joint title, didn't care how old I was... This would just be the student loan portion of things....

I will post bost the rules for IRS Claiming and also Independent regulations to get independent student loans...

[HopeinHorizon]

IRS qualifications to claim child...

You can claim a dependent on your tax return if you meet all five tests:
Gross income: The dependent earns less than $3,100 in income during the year,
Total Support: You provide over half of the dependent's total support during the year,
Relationship: You are related to the dependent in certain ways,
Joint Return: If the dependent is married, the dependent cannot file a joint return with his or her spouse.
Citizenship: The dependent must be a citizen or resident alien of the United States, Canada, or Mexico.
Each criteria has more detailed criteria and execeptions. So let's examine each one carefully.

Gross Income Test
Generally speaking, a dependent is someone you support. So, logically, that person should not be making enough money to support himself or herself.
You cannot claim a dependent who earns $3,100 or more. Exceptions to this rule are children under age 19, or children under age 24 who are full-time students. The children must be under age 19 or 24 at the end of the tax year. If the child has turned 19 during the year, then the child must be a full-time student for you to still claim him or her as a dependent. If the child has turned 24 during the year, then you can no longer claim the him or her as your dependent. If you support someone older than 19 (or 24) who has no income, or under $3,100 in income, then you may be able to claim this person as a dependent if you meet the other four tests.


Total Support Test
You must provide over half of a person's total support during the year. Let's say two people equally support a child and split all expenses exactly 50-50. Then neither person can claim the child as a dependent, because no one provides over half of the child's support.
There are two exceptions for the Total Support Test. If multiple people support a single person, they may file a Multiple Support Agreement with the IRS to allow one person to claim the supported person as a dependent. For example, let's say three sons all equally support their mother. Since no one provides over half the mother's support, they could file a Multiple Support Agreement (Form 2120) to allow one of the sons to claim the mother as a dependent.

The second exception is for children of divorced parents. Generally, the custodial parent is allowed to claim the child as a dependent. Three situations will allow the dependent to be claimed by someone other than the custodial parent. (1) all parties supporting a child file a Multiple Support Agreement. A Multiple Support Agreement (Form 2120) would have to filed with the IRS. (2) The custodial parent releases his or her right to claim the dependent to the noncustodial parent. The Release of Claim to Exemption (Form 8332) would have to be filed and attached to the noncustodial parent's tax return. (3) A divorce decree finalized before 1985 grants the non-custodial parent the right to claim the dependent.


Relationship Test
The dependent must be related to the taxpayer is one of the following ways.
son or daughter, grandson or granddaughter, great grandson or great granddaughter, stepson or stepdaughter, or adopted child,
brother or sister,
half-brother or half-sister,
step-brother or step-sister,
mother or father, grandparent, greatgrandparent,
stepmother or stepfather,
nephew or niece,
aunt or uncle,
son-in-law, daughter-in-law, brother-in-law, sister-in-law, father-in-law, or mother-in-law, or
foster child who lived in the home an entire tax year.
These are the only allowable relationships. You cannot claim your cousin, your friends, your boyfriend or girlfriend, or your domestic partner as a dependent. Relationships established marriage do not end with death or divorce. So if you support your mother-in-law, you can claim her as a dependent even if you and your wife are divorced.


Joint Return Test
If you support someone who is married, you cannot claim the person as a dependent if he or she files a joint return. For example, you support your mother-in-law, who is married and files a joint return with her husband. You cannot claim your mother-in-law as a dependent, because she files a joint return.
The only exception is for married children. You can claim your son or daughter as a dependent even if he or she is married and filed a joint return. However, the married child and spouse filed a tax return only to claim a refund, and were otherwise not required to file a return.


Citizenship Test
Your dependent must be a citizen or resident alien of the United States, Canada, or Mexico at some time during the year.

[HopeinHorizon]

FAFSA Independent

These are the questions that you would have to answer yes to be considered independent for school; however, if the parents don't qualify for PLUS loan, they give those students who are dependent the independent loan maximums...

Was the student born before January 1, 1982?
During the school year 2005-2006, will the student be working on a master's or doctorate program (such as an MA, MBA, MD, JD, Ph.D., Ed.D., graduate certificate, etc.)?
Is the student married?
Does the student have children who receive more than half of their support from the student?
Does the student have dependents other than the student's children or spouse who live with the student and who received more than half of their support from the student, now and through June 30, 2006?
Are both of the student's parents deceased, or is he/she (or was he/she until age 18) a ward/dependent of the court?
Is the student a veteran of the U.S. Armed Forces?

[HopeinHorizon]

I just reread your post and noticed he goes to junior college now...

When he transfers (even if he is considered dependent) he will be a junior and be eligble for 5500 a year... you could prove him independent by being denied for plus loan to get him a limit of 10500, but 5500/yearly might be plenty to get through the rest of school....

[SinkingFast]

$5500 might make a pretty good dent in tuition, but I doubt it'll cover school totally when he transfers. His degree program goes to a Major State Univ then. Plus he'll have to live there. It's too far to commute daily. About 3 hours away. OK for a trip home for the weekend, but not every day for classes.

Thank goodness there are Wally Worlds about every where. The city where that Univ is has at least one we know of. So son could maybe transfer his employment and already have a job when he hits town.

TY so much for the financial aid info. I told son he needs to go by the FA office and chat with a counselor. But maybe I need to get a bit involved at this point to help guide him and also to meet the Counselors there so I can learn too.

Things have changed so much since I went to college. We filled out FA forms with the school we were going to back then. The FA office checked everything, matched you up with Scholarships, Grants, and Loans. Now there's the FAFSA and it's all done electronically.

[student123]

One more question. I spoke with an attorney that said I would still be eligible for government student loans, but that there will likely be a 5 month period where I will not receive any funding...until the BK is discharged. Did this ring true for anyone here? There's no way that will work for me.

[debtisbad]

The books are what is killing me. 230.00 for one text book. ridiculous!

[Graphic]

One more question. I spoke with an attorney that said I would still be eligible for government student loans, but that there will likely be a 5 month period where I will not receive any funding...until the BK is discharged. Did this ring true for anyone here? There's no way that will work for me.

Your best bet is to talk to your admissions counselors. I highly doubt that is the case because from what I know and have been told they don't look at your credit at all UNLESS you go for the private loans, which of course are credit based. There is plenty of money in govt. based loans and one shouldn't have to get into the private loans unless they are just going to Oxford or Princeton or something.

Just to be sure though I would ask an admissions counselor, they should know best.