If you’re a person that needs to go to school, but has bad credit, don’t panic. There are several options out there for people who need money for higher education. Having bad credit does not make it impossible to secure a student loan or financing for college.
If you’re an eighteen year old trying to get that student loan for your first year of college, know that there’s a difference between having no credit and having bad credit. Having no credit does not exclude you entirely from getting a loan on your own. For example, federal student loan programs don’t even require credit checks. Below are some options you may want to consider when trying to get a student loan with bad credit.
Ways how to get go about getting student loans with bad credit
* Try and get a cosigner with someone with good credit. A close family member would do fine
* If you have a good track record with your bank despite your bad credit, try and explain your situation, but expect high interest rates if you succeed
* Apply for a combination loan
* Research to see if your state has any government loans or grants they offer to those with poor credit.
* Try and get a federal grant
* Look for the best federal student loans
* Fill out a FAFSA form to be eligible for federal loan programs
Tips and Warnings
* Don’t put tuition on credit cards
* With bad credit expect high interest rates
* Remember that your credit score will start to rebuild once repayment begins
* Make sure you pay all your loan payments on time so your credit score doesn’t get worse
* Manage repayment wisely, as failing to make payments will make your credit score even lower
* If applying for Grants, know that they are extremely limited
* Always Watch out for Scammers!
Popular Federal Loans
Any guidance counselor or financial aid advisor will tell you that this loan is the first anyone who needs financial need should try and go for. After filling out the Free Application for Federal Student Aid(FAFSA), you may be eligible for federal student aid. The Stafford Loan is designed specifically for financially needy students. With this loan the government pays off the interest until the borrower has graduated, and then he or she will pay interest on the remainder of the loan.
The unsubsidized Stafford Loan also requires no credit check to obtain it. This type of loan is for anyone to apply for and not just individuals who especially need financial assistance.
Perkins Loans-Credit-free Campus Based Aid
This loan is like an award that comes directly from the college for students who have the greatest amount of financial struggles. Perkins loans typically offer anywhere from $1,000-$4,000, along with a nine month grace period that follows the borrowers graduation. This loan typically is a combination of government and college funds.
To get as much money from a Perkins loan:
* Apply as soon as possible
* Turn in the FAFSA form as soon as possible
* Know that Perkins loans are first come first serve basis
State Student Loans
These loans directly from your state do offer another great strategy for financing. Find out if your state does this first. These types of loans in most cases would be your state government partnering up with private student loan providers to offer the best deal on both federal and private student loans. Contact your state’s officials office to find out more.
Federal student Grants
If you’d rather be in the position to be awarded money instead of borrowing it, apply for grants instead. The main difference between student loans and grants is that you don’t have to repay grants. It’s your money, if awarded it. Also with grants that come from the government, there is no credit check involved because it is federal student aid. This will generally also require you to fill out a FAFSA form.
Federal Pell Grant
The federal Pell Grant is one of the most popular grants that is used yearly to assist students of higher education in financial aid around the nation. Like all other federal student financial aids, there is no credit check attached to the deal because it is specifically designed for low income students. Know that grants like these are in extremely high demand and so are very limited. You must apply for these grants as early as possible to benefit.
Private Student Loans
Private loans do offer more funds for college. It is not truly impossible to get one of these loans with bad credit, but it is extremely difficult. Without a doubt to secure one of these loans with bad credit you will absolutely need a cosigner that does have good credit. Usually a family member will do just fine. Remember that no company in their right mind would lend to someone with a poor credit history without some type of collateral, so avoid any scammer that would. Please ponder that warning, watch out for scammers that are always swimming all over the internet.
How to Find a Co-Signer
Usually a cosigner is someone close that you can trust, like immediate family. But keep in close mind that the cosigner must have good credit. This is what gives you the chance to get as low of an interest rate as you can. Plus, if trying to get a private loan, they won’t approve you if their dealing with two bad credit scores. So if Uncle Bob or Aunt Sallie has a better credit score than mom or dad, you’ll probably want to cosign with Uncle Bob or Aunt Sallie.
Borrower Grace Periods
After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be
* Six months for a Federal Stafford Loan (Direct Loan Program SM or Federal Family Education Loan (FFELSM) Program).
* Nine months for Federal Perkins Loans.
PLUS Borrowers—The repayment period for all PLUS Loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a graduate student PLUS Loan borrower (as well as a parent PLUS borrower who is also a student) can defer repayment while the borrower is enrolled at least half-time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower during the deferment.
Parent PLUS Loan borrowers whose loans were first disbursed on or after July 1, 2008, may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the parent during the deferment.
Make Your Payments on Time
Your loan servicer will provide information about repayment and will notify you of the date loan repayment begins. It is very important that you make your full loan payment on time either monthly (which is usually when you’ll pay) or according to your repayment schedule. If you don’t, you could end up in default, which has serious consequences (see Default below). Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans.
Get Your Loan Information
The U.S. Department of Education’s National Student Loan Data SystemSM (NSLDSSM) provides information on your federal loans including loan types, disbursed amounts, outstanding principal and interest, and the total amount of all your loans. To access NSLDS, go to www.nslds.ed.gov.
You have a choice of several repayment plans that are designed to meet the different needs of individual borrowers. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Go to Repayment Plans and Calculators for more information about the various repayment plans and to calculate your estimated repayment amount under each of the different plans.
If you have specific questions about repaying FFEL, Direct, or Perkins Loans, contact your loan servicer. In the case of Perkins Loans, your servicer will be the school that made the loan. If you don’t know who your loan servicer is, go to www.nslds.ed.gov to find out.