Bad Credit Student Loans

Every student deserves the chance to attend college and earn a degree. However, many of the traditional methods for obtaining funds for tuition, room and board, school supplies and other expenses do not apply, as the current economic climate and credit problems within the family limit the options for many high school graduates. The good news is many programs are in place to help college entrants locate scholarships, grants and bad credit student loans.

The Problem of Bad Credit
Students who graduate high school with high academic marks may be offered admittance to the college of their choice, but the limited resources of the family means a search for financial assistance must be undertaken. The traditional lender will not extend credit if the family has had past problems with debt, and therefore turning to alternate funding streams must be considered. Happily, the federal government, state agencies, private school programs and disadvantaged student foundations are eager to help.

Federal Student Aid

Pell Grants

The federal government offers the Pell Grant to students of low income families, and this money is available regardless of the family’s credit rating. It is a need-based program that involves submitting a Free Application for Federal Student Aid, or FAFSA. This application is reviewed and a report is compiled that outlines the expected family contribution. The amount given as a grant is determined by the actual tuition costs minus the amount the family can provide. This grant is available on an annual basis for both undergraduate and graduate students.

Stafford Loans

The Stafford Loan program has two categories – unsubsidized and subsidized loans. Stafford loans are the most popular bad credit student loans. These programs are automatically applied for upon completion of the FAFSA. Loan amounts are not based on a credit rating; rather, they are based on the amount of college credits earned in school. More college credits earned means more loan eligibility. The loans are broken up into the two categories based on financial need. The more financial need of a student, the larger portion of the loan will be made up of subsidized funding, where the government pays the interest while the student is in school. For the portion of the loan that is comprised of unsubsidized funding, the student is responsible for any interest that accrues.

Perkins Loan

Perkins is another federal aid program that lends money to college students regardless of their credit situation. This is not a grant and must be repaid, but the interest rate is quite low. Award amounts range from $1000 to $4000 per year, not to exceed $20,000 in a college career.

Bad Credit Student Loans
Grants from Private Schools

These institutions compete for the most academically advanced students, and are willing to extend financing in the form of grants and scholarships based on the high school GPA, entrance exam scores and the degree chosen by the student. Incoming freshmen who are planning to pursue a bachelor’s degree may want to ask the admissions office of the school about degree-based loans and grants, as much of the funds are donated by entrepreneurs and large corporations interesting in finding future graduates who will have the skills to become employed in a particular industry.

Loans And Scholarships For Disadvantaged Students

These are often degree-based as well, and may be of particular interest to students planning to study medicine, nursing or primary care. One of the largest programs of this type is administered by the Dept. of Health and Human Services and gives preference to low income families or those with past credit problems. These types of loans often need not be repaid if the graduate is employed in their intended field for an extended period after obtaining their degree.

In addition to the programs listed above, there are also a number of non-traditional lenders that have specialized bad credit student loans available. These institutions often base their loan decisions solely on the need for financial aid and accept applications from low income families and those battling credit problems.

All About Bad Credit Student Loans

College StudentWho can get bad credit student loans?

Anyone with a low credit score can apply for bad credit student loans. Do not let your credit score get in the way of your chance for a college education. The federal government has student loan programs for students so that your bad credit will not hold you back from getting these loans.

What are bad credit student loans?

Bad credit student loans are loans you can get where your low credit score will not impact your chance of getting a loan. These loans are typically government-backed loans, although there is a chance that some banks will offer student loans to people with bad credit if the credit is not too poor. These loan programs include the federal Stafford and Perkins loans and the Parent Loan for Undergraduate Students (PLUS) program where the parents are the ones taking out the loan. There are also field-specific and state loans that are available by applying through the FAFSA. In addition to loans, there are grants available to those students who demonstrate the most financial need.

When should I apply for bad credit student loans?

That depends what type of school you are going to and when you are looking to start. If you are in high school or planning on attending school starting in the fall, you should apply for bad credit student loans such as Stafford Loans by April. If you are looking into private loans, an earlier application is better. If you get denied for a private loan, do not continue to apply because this can drag your credit score down even more. Instead, find out what you can do to fix your credit, and then reapply.

Where should I apply for bad credit student loans?

There is a one-stop-shop for the federal loan application. That site is www.fafsa.ed.gov. This is the Free Application for Federal Student Aid. There are some sites out there that mimic that website that will charge a fee to fill out your FAFSA for you. This is not the correct website, so watch out for these.

Why should I apply for bad credit student loans?

Many people are afraid to apply for bad credit student loans because they are afraid to make their credit worse. Applying for student loans through the government will have no impact on your credit score. If you decide to take out loans, these will go on your credit report, but remember this can only help you if you make the payments once you graduate. Student loans have low interest rates and can provide the bridge between you and your college education.

Leave a Comment