How to Find Student Loans with Bad Credit

Finding student loans with bad credit is not a hassle if you know what steps to take. When you have bad credit, it hampers you from getting many different types of loans. It is hard to purchase a car or a house when you have bad credit. Luckily, you can get student loans with bad credit if you apply for federal student loans. This is done through the FAFSA (Free Application for Federal Student Aid) website.

Here are the options for student loans with bad credit:

Federal Student Loans with Bad Credit

Federal student loans are a great option for students with bad credit because the government does not perform a credit check to give you these loans. That means that almost anyone can get a loan via the FAFSA provided that they submit their application in time, and meet certain criteria. The longer you go to school and the more credits you earn – the more loan money you are eligible for.

There are three options under federal student loans: the Perkins Loan, Stafford Loans and PLUS Loans. You may also go for a Pell Grant or a field-specific loan. The good news is that these loans come with much lower interest rates and lengthier repayment periods. Some student loans for bad credit require you to demonstrate financial need, such as the Perkins Loan or the Pell Grant, but the Stafford Loans are available to everyone.magnifying glass

The Federal Perkins Loan

This is a subsidized loan available to both graduate and undergraduate students. Once again, there’s no credit check, but you have to qualify as financially ‘needy’. Once you apply through the FAFSA, and you do qualify for the loan, the amount you are awarded is determined through a calculation of the cost of attendance minus your expected family contribution (EFC). For a better chance of securing this loan, your EFC has to be quite low.

Under the Perkins program, you are eligible for a maximum of $4,000 per year, with the cap for the entire degree set at $20,000. For most people – hopefully not you – this amount is not enough and needs to be supplemented. This is especially true if your degree stretches beyond four years.

Stafford Loans

For the Stafford Loan program, there are two options: unsubsidized or subsidized. Subsidized Stafford loans are based on your financial need, and the government pays the interest for you while you are in school. Unsubsidized loans are available to any student, regardless of their financial situation and interest on these loans will accrue while you are in school, although payment can be deferred.  This is a good option for getting student loans with bad credit, but the downside to Stafford loans is that the award amounts are often less than the cost of tuition, so students often need to seek additional funding.

PLUS Loans

This bad credit student loan is actually a loan awarded to your parent to support your college education. There is no credit check on you, but on the parents since this is treated like any other loan. The loan program is still under the federal government, so the interest rates remain lower than normal loans but still higher than the other federal loans.

Field-Specific Loans

Another worthy alternative is applying for non credit-based loans which are given in several fields of study, especially teaching and medical careers. For example, there’s the Nursing Student Loan Program which awards up to $4,000 per year. These field specific student loans mostly require that the recipient practice the same profession for at least the entire loan repayment period.

Pell Grant

If you’re found to be in a ‘real financial fix’ by the FAFSA, you may qualify for a federal Pell Grant. This is money in the form of grants that does not need repayment.

The Truth about Private Student Loans

Federal loan programs and grants may not really satisfy your financial requirements, so you could still find yourself badly needing a private loan. The straightforward approach would be to get a bad credit student loan from a lender. These could have hefty interest rates, processing fees and strict repayment terms. However, you may look at this as an opportunity to rebuild your credit score.

A better approach would be to find a willing, creditworthy cosigner. The interest rates might still be high, but there is no credit check on you. Note that the repayment for the loan begins immediately.

Private loans are harder to get but you may still need them as supplemental funding. Ultimately, though private loans present the opportunity to repair your credit, federal student loans with bad credit present the most friendly loan terms without credit checks.



Leave a Comment