Can I get a Student Loan with Bad Credit?
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.