If you have bad credit, you may be reluctant to start a college education for fear that you won’t qualify for a student loan to pay for school; but fear not! If you have bad credit, you have several options for getting a student loan. Federal loans and private loans (with or without a co-signer) are avenues to pursue to help pay for school.

Federal loans, both Stafford and Perkins loans, are available for students with bad credit. These student loans for bad credit are ideal for nearly all students, including those with bad credit because they are easy to obtain, offer low interest rates, and have flexible repayment terms. Generally, repayment is not required until after graduation so the chance that you will have a better job making enough money to afford the monthly payments of these student loans is pretty good.

Unlike loans from private lenders, there is no credit check when you apply for either the Stafford or Perkins loans. These loans are ideal for individuals with bad credit for this reason alone; however, the low interest rate means you will likely save money in repayment as opposed to private loan options. These loans are easy to apply for, and you will be contacted by your school’s financial aid office regarding the loan amount and how to officially accept your loan. In many cases, a master promissory note is signed once for the first loan and all subsequent loans are simply added to this note.

A co-signer with good credit may be an option for some college students with bad credit. There are also a number of private lenders who offer student loans to people with bad credit. While these are good options when no other choices are available, applying for student loans with bad credit may be complicated and be prepared to pay a significantly higher interest rate compared to federally-backed student loans.

Standard Student Loan Requirements

Students with bad credit are encouraged to apply for federal student loans by submitting a Free Application for Federal Student Aid (FAFSA). Through this application process, you will lean if you qualify for Stafford and Perkins loans, as well as any unsubsidized federal student loans. These federally-backed student loans are ideal for people with bad credit because a credit check is not required to qualify and the repayment terms are flexible. Federal student loans can even help you rebuild your credit once you enter your repayment period as the payments you make (or miss) are reported to the three major credit bureaus.

If you are a college student with bad credit, federal student loans should be your first avenue to pursue because they are just as attainable for you as a student with good credit. The application process is easy and straightforward. Interest rates on these loans are likely to be the lowest of any other loan available to pay for school which will save you money in the long run. The repayment period for these loans usually begin after graduation or if you drop below half-time status and if you select an unsubsidized loan, you are not required to pay the interest while you are in school at least half-time. There are also federally-backed incentives for certain programs that offer loan forgiveness.

Alternative Student Loans for Bad Credit

If Stafford or Perkins loans are not options for you, or do not fully cover your college expenses, you will need to look into alternative student loans for bad credit. These can be private loans with or without a cosigner. If you have the option, applying for a private loan with a cosigner will usually get you the best interest rate and repayment terms; however, alternative student loans for bad credit can be found if you do not have a cosigner with good credit. A number of major banks offer loans to students with and without cosigners, and while there are other lenders as well, you should be wary of any alternative loan program that requires you to pay money up front, has stringent repayment policies, or anything else that simply does not feel right.

Applying for a Student Loan for Bad Credit

If you have bad credit, the first step for applying for a student loan is to complete the FAFSA form to see what federally-backed student loans you are entitled to. Once you have received your Student Aid Report (SAR) from your college, you can select any and all federal student loans offered to you. A master promissory note is signed once, and any additional loans are simply added to the original note make subsequent borrowing even simpler.

Sometimes additional funds are necessary to pay for school. If federal student loans are not enough to cover your education expenses, private loans may be necessary. Your school’s financial aid officer may be able to recommend a private lender that accepts applications from students with bad credit. Your chances of finding a private lender are much better if you have a cosigner with good credit; however, loan programs are available for all types of circumstances, even those with bad credit.

Student Loan Lenders for Bad Credit

There are a number of student loan lenders for bad credit that originate from major corporations. Be wary of alternative loan programs that vary from the normal and be sure to watch the fine print which may significantly change the repayment terms or interest rate once you enter the repayment period. Students with bad credit should only consider private loans after they have exhausted all the funds from federally-backed student loans, such as the Stafford loan.

Direct Student Loans are funds made available to students and parents to help pay for college. Direct student loans are low-interest loans, and while the lender is the U.S. Department of Education, individuals may work with a private business who releases the funds or directly with the federal government. Direct student loans include subsidized, unsubsidized, and parent-only loans. These loans are simple to apply for, and unlike other forms of financial aid, are not based on financial need. These funds must be paid back after graduation; however, there are payment programs, opportunities to consolidate multiple loans, and loan forgiveness programs for qualifying individuals.

 A major benefit to direct student loans as opposed to private education loans is that these loans are funded through the federal government. Generally, the interest rate on direct student loans are considerably lower than privately made loans, can be easily accessible to individuals with little or no credit history and bad credit, and can be borrowed against with a single contract which makes things must less complicated after graduation. Direct student loans for qualifying individuals are also eligible for loan forgiveness programs, unlike many private loans.

Types of Direct Student Loans

Undergraduate students who apply through FASFA may be eligible for several types of direct student loans. Subsidized student loans, unsubsidized student loans, and PLUS loans for parents may all be good choices to help cover the costs of secondary education. Graduate students have additional resources when it comes to direct student loans.

Obviously, grants and scholarships (i.e. money that does not need to be repaid) is more desirable than direct student loans which must be repaid after graduation. After that, subsidized direct student loans are probably the next best type of money for college because the interest is subsidized by the federal government. This means that subsidized direct student loans do not accrue interest while the student is attending college at least half time. All subsidized direct student loans are through the U.S. Department of Education. There are no actual subsidized private student loans; however, a private lender may offer a subsidized loan because the funds are guaranteed by the federal government. Students are able to qualify for subsidized student loans based on financial need. 

Unsubsidized direct student loans are available directly from the U.S. Department of Eduction and through certain private lenders. Unsubsidized student loans from private lenders are still guaranteed by the federal government and are subject to similar rules and regulations as those made directly from the U.S. Department of Education. Unsubsidized direct student loans are not based on financial need, and are available to nearly all students who attend qualified post-secondary institutions. While unsubsidized student loans are widely available, the major drawback to these types of loans is that interest begins to accrue as soon as the loan is dispersed unlike subsidized student loans; however, you are not required to pay the interest while attending school.

PLUS loans for parents are considered direct student loans; however, these loans are for parents who wish to help cover the costs of their child’s education. Parents PLUS loans are non-need based, but a credit check is required to qualify for the loan. The interest rate on a Parents PLUS loan is slightly higher than an unsubsidized student loan, but is often lower than the interest rate from a private loan.

 Federal Direct Student Loans

Federal direct student loans are an excellent way for students and their families to help pay for college when need-based financial aid, scholarships, and grants are unavailable or are not enough to pay for the total cost of attending a qualifying college. There are several options available depending on your specific need and financial situation. It is important to remember that some federal direct loans may be dispersed through a private lender; however, the loan is still guaranteed by the federal government.

 Applying for Direct Student Loans

 Applying for direct student loans is a fairly easy process. Simply fill out the Free Application for Federal Student Aid (FASFA) form by using information found on your (or your parents’) tax return from the previous year. Select which school you will be attending before submitting the form and you will receive a Student Aid Report (SAR) within a few weeks. You will sign a Master Promissory Note (MPN) and select the amount you wish to borrow. Each year, you will be able to choose the amount you wish to borrow, up to the amount offered, but will only need to sign the MPN the first year.

Direct Student Loan Consolidation

After graduation, or if you drop below half-time in school, you may want to consider direct student loan consolidation. Direct student loan consolidation allows you to convert all your student loans, federally-backed and private loans, to a consolidated loan. In many cases, this will not only help lower your total monthly payment, but you may qualify for a lower interest rate which means you’ll repay less in the long run. The application process for student loan consolidation is straight-forward and the form can be downloaded from the direct loan website. To successfully complete the application, you will need to have all the paper work for your current loans easily accessible.

Student loan consolidation combines all your student loans and often lowers your monthly payment. If you spent four or more years in college, you are likely to have a number of student loans from subsidized to unsubsidized, Stafford and Perkins loans, and perhaps some privately-funded student loans as well. After graduation, you enter the repayment period and each loan requires a monthly payment. Not only can keeping track of several (or more) monthly payments be difficult, each loan’s minimum payment may become a financial burden when they are added together each month.

Consolidating your student loans is a lot like consolidating any other debt. A new loan is taken out to pay off all existing student loans so that only one monthly payment is made each month to the new lender. There are many benefits and a few disadvantages to this option so be sure to consider your options carefully as student loan consolidation is not required.

Benefits to Consolidating Your Student Loans

There are several benefits to consolidating your student loans. Loan consolidation allows you to make one monthly payment instead of making several payments to various lenders each month. This may also lower your monthly payment and make your student loan repayments more affordable. By consolidating your student loans, you may also qualify for a lower interest rate which can save you money over time.

Before consolidating your student loans, be sure to consider the following. If you consolidate your student loans during your grace period following graduation, you forfeit any remaining time of your grace period. In many cases, student loan consolidation will allow you to extend your loan repayment period from 10 years to 30 years which will decrease your monthly payments and possibly make them more affordable to you; however, you will pay more in the long run because of the amount of interest that accrues over the longer repayment period. Finally, remember that any benefits you have with an individual loan will not be valid after the loan has been consolidated.

How to Consolidate Student Loans

You can choose to consolidate your student loans through an online application or submit the student loan consolidation application through the mail. Either way, before you begin the application process, you’ll want to get organized so that you can easily answer each question. You’ll need to gather all the paper work for your current student loan or loans such as monthly and quarterly statements, and if you plan to submit the application online, you’ll need your Federal Student Aid PIN. (If you don’t have a PIN for the website, it’s easy to request one.)

Using the information you have for your current student loans, simply fill out the federal student loan consolidation application. You will also have the option to choose your repayment plan. Some of the options, such as the Income Based Repayment plan, as the name suggests, is based on your income. Not everyone qualifies for this plan, and even if you do, it may not be the best plan for you. Weigh each repayment option carefully and select the option that best suits your financial situation.

Federal Student Loan Consolidation

Federal student loan consolidation is a simply and straightforward process. Each month you probably receive statements from the Department of Education. Use these statements as well as the quarterly or annual statements you should also receive to complete the loan consolidation application. While in most cases loan consolidation offers a lower interest rate, it is not guaranteed so be sure you are paying attention to the details. Likewise, any perks you may be eligible for with your current loan or loans will be unavailable once you consolidate your loans, including a six-month repayment grace period. Be sure to complete the application with honest and accurate information. Once the federal student loan consolidation application is complete, submit the form and wait for a response. While the process is meant to be streamlined, do not be surprised if you receive a notice requesting additional information, especially if you selected an income contingent repayment plan.

Private Student Loan Consolidation

All student loans are eligible to be consolidated, and private student loan consolidation is the same process as federal student loan consolidation. In fact, you should include both types of loans on the same application if you wish to consolidate any or all of your student loans. While it is possible to find a private lender to consolidate your federal and private student loans, it is unlikely to find one that has more favorable terms than the federally-backed student loan consolidation program.

One of the more inspiring things the President has said is his acknowledgement that: “All along that education pipeline, too many people”, he said in a speech last year, “are slipping through the cracks. It’s not only heartbreaking for those students; it’s a loss for our economy and our country”. If you need more information about college grants, look on the internet.

He is particularly concerned that only 29% of Americans have a college degree, where many other industrialized nations have more like 40%. Another statistic is only about 40% of Americans who start school actually complete their studies to become a college graduate. The rising costs of education, approximately eight percent per year, means many who start will not be able to finish as costs outpace their abilities to finance.

For example, in his first year of office alone, the President dedicated $500 million to have community colleges develop new online education programs. From there, he wants to have these courses available to all students who can get online, from their desktop to the new Amazon Kindle. Actually, what’s truly amazing is he wants to see 20-25 new government-approved courses available per year.

Meanwhile, the U.S. Board of Education estimates an online degree costs a little under 40% less than going to on-campus courses. USA Today reported last year that going on campus for a 4-year degree is $150,000, while the cost is $65,000 for a Bachelors degree at an online university. There is an abundance of information about scholarships online on the web.

These days one can get an online degree in nearly every subject, from vocational trade certificates to Masters. Many online academies offer classes as comprehensive as the top schools throughout the world. Many are actually created and offered by these same top schools. It’s no surprise the President is a fan of online education. Students get the same education online and attending this way allows more students to participate as they are able to work and attend classes at the same time.

Going online has other cost-saving benefits, too. They can include cutting commute time, possible baby sitter fees for working parents, and the wear and tear constant commuting does on vehicles, among others. Another incredible value is a student can take the course at a time that’s more convenient to his other needs, not when the course is offered on campus. This can also be of value to working parents, who need to be at home as much as possible for their children.

College loans for students are a means to help get your education on track. Researching scholarships and grants for online school will provide you with information for your individual situation. More education means more choices – appreciated at every level.

Browse through college catalogs for the fall 2010 semester or surf the web sites of virtual and traditional institutions of higher education. Long popular online degree programs in business, nursing, information technology and criminal justice are now accompanied by education offerings tailored to those pursuing degrees in philosophy, history, African-American studies, the STEM (science, technology, engineering and math) subjects and more. Where Southern California recently saw an increase in online degree programs at the associate degree level, a single university in Memphis added 18 new bachelor and master’s degree programs to its existing 22 for the coming fall semester, according to reports.

Scholars have suggested the online education boon could in part be the result of a historically large 2009 high school class and physical settings that can’t accommodate a growing student population. In “32 Trends Affecting Distance Education,” representatives of two universities cited National Center for Education statistics forecasting that online college enrollment would grow 16 percent between 2003 and 2010. If you need more information about pell grants for college, look on the internet.

The information was based on high school information alone. Adults, including rising numbers of women and minorities, make up a large segment of distance learners. While the number of 18 to 24-year-old students increased by 41 percent between 1970 and 2000, the number of adult students rose 170 percent during this time, according to “32 Trends”. Online education these days reportedly costs about the same as a traditional campus setting. And while more students apparently shop for online classes and degree programs that best suit their schedules, they can also shop for online grant, scholarship and fellowship opportunities to help offset the cost. These types of grant applications include the Free Application for Federal Student Aid (FAFSA) as well as scholarships and fellowships offered by large companies, non-profit organizations, civic groups and more.

The education market has shifted dramatically from traditional classroom and lecture-room education to online education, a Marketwire news release reported in March. It’s gotten to the point, in fact, where distance learning is growing much faster than higher education overall, according to a March San Diego Business Journal report. More than 4.6 million students were enrolled in least one online course during the fall 2008 semester, representing a 17 percent increase over fall 2007 enrollments, the Business Journal reported, citing a 2009 Sloan Consortium survey. The higher education student population as a whole, on the other hand, rose by only 1.2 percent over these same two periods, according to the survey information provided.

Online education can be provided by completely virtual colleges or by traditional institutions offering online classes and degree programs. In some instances, distance learning offerings contribute to more than 60 percent of a traditional for-profit college’s revenues, the Marketwire release reported. The number of students enrolled in online education programs offered by a Memphis institution jumped by nearly 50 percent in one year, according to an area newspaper known as the Commercial Appeal. Because online college registration areas fill up quickly, keeping up with the demand has been a challenge, one college representative reportedly told the San Diego Business Journal. There is an abundance of information about scholarships online on the web.

For-profit higher education institutions were considered the fastest growing online education segment when the “32 Trends” report was written. And the report anticipated that the number of degree-granting institutions will continue to rise into 2020, while the number of traditional campuses declines. An Information Age work force during this time is expected to require continued retraining and “retooling” as well accelerated online degree programs, the report forecasted.

Distance educators at the time of “32 Trends” were exploring the ways that technologies such as wireless laptops, personal digital assistants (PDAs), videoconferencing, virtual reality, gaming environments and video streaming enhance distance learning. Looking ahead, the report forecasted that college accreditation and program approval is going to change, becoming more outcome-based and, by 2025, without one national accreditation system. Governments, testing companies and others, the report noted, would put testing programs into place, and large corporations would develop their own approval systems. To accommodate the accountability emphasis, distance educators should plan ahead to maintain accreditation and meet consumer demands, “32 Trends” suggested. Online education is going to evolve to focus on the student as consumer as well as on flexibility and global reach, according to the report.

Those wishing to participate in distance classes will find the same types of scholarships and grants available as those attending campus-based institutions. Determining which college loans you qualify for may bring the exciting news that your college education is nearer than you thought.