Can you get student loans with bad credit? Yes, you can borrow federal student loans with bad credit. But getting private student loans with bad credit will be tough if you don’t have a cosigner.
Let’s take a closer look at your options for student loans even with a subpar (or nonexistent) credit history.
- You can take out federal student loans (even with bad credit)
- Private student loans can fill a funding gap
- A cosigner could help you get private student loans with bad credit
- Private student loans are different from federal ones
- Be careful about taking on too much debt
Federal student loans were designed to help all students get the aid they need to pay for a college education. These loans don’t take your past financial activity into account, so you could qualify for federal student loans with bad credit.
In fact, you don’t need to go through a credit check at all to take out federal student loans. You do, however, need to fill out the Free Application for Federal Student Aid (FAFSA). This form collects information about your and your family’s financial situation to determine your eligibility for financial aid.
Some colleges also require you to submit a form called the CSS Profile to be eligible for institutional aid. Based on the information you provide, your college’s financial aid office will offer need-based or non-need-based federal student loans.
Note that you’re not obligated to take out the full amount of aid that you’re offered. Before accepting a loan, review the terms and conditions, and use a student loan calculator to estimate your future monthly payments. By taking the time to understand your loans, you can make sure you don’t take on too much debt.
Once you start paying off your federal student loans, your on-time payments will help build your credit score.
Federal student loans should almost always be your first choice when borrowing for school. With a federal student loan, you’ll get a relatively low interest rate, as well as a variety of flexible repayment plans and protections.
But federal student loans don’t always cover the full cost of school, and you might need additional funding. If that’s the case, it’s worth exploring your options for private student loans.
Unlike the Department of Education, private lenders do take your credit score into account before approving you for a private student loan. So you won’t find bad credit student loan options at a private company.
All hope is not lost if you’re pursuing private student loans with bad credit. To get around the credit requirement, you can apply with a creditworthy cosigner, like a parent or other relative.
Your cosigner’s strong credit will make up your weak credit, thereby possibly making you eligible for a loan. That said, your cosigner will be just as responsible for the debt as you are.
If you fail to repay the loan, your cosigner will be on the hook for your debt. So before entering a loan agreement with your parent or another person, make sure to discuss expectations around repaying the loan.
By having a straightforward discussion about who will pay back the money and when, you can prevent future conflicts.
Note that private student loans have different terms and conditions than federal student loans. You probably won’t have as many repayment plans, like income-driven repayment. And the interest rate you get will depend on your cosigner’s creditworthiness, along with other factors.
Plus, you can choose between a fixed interest rate, which stays the same over the life of the loan, and a variable rate, which can fluctuate along with prevailing market rates.
Because private lenders offer different terms, make sure to shop around for your best rates before choosing a loan. By doing your research, you can find the private student loan with the best terms and conditions for your situation.
When it comes to borrowing for college, you won’t find bad credit student loans. But you can take out federal student loans, which don’t require a credit check at all. And if you need even more money, you might qualify for private student loans, as long as you can apply with a cosigner.
That being said, you should be cautious before taking on too much debt. Besides student loans, explore other options, such as:
- Grants and scholarships
- A part-time job to earn extra money
- A budget that helps you cut your expenses and live well on less by being frugal
It’s well worth exploring ideas and creative solutions and making the effort to take out as few loans as possible. Once you do enter repayment on your loans, make sure to keep up with your monthly bills.
By making on-time payments, you can build up your credit score into a good or even excellent range. Then, if you need another loan or mortgage in the future, you’ll be able to qualify for the best rates on your own.
Kali Hawlk contributed to this article.
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|* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
1 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1)All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 11/4/2019. Variable interest rates may increase after consummation.
2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 Important Disclosures for Discover.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
5 Important Disclosures for Citizens.
Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of February 1, 2020,the one-month LIBOR rate is 1.66%. Variable interest rates range from 4.22% – 7.81% (4.22% – 7.81% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.36% – 7.95% (4.36% – 7.95% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown for eligible, creditworthy applicants with an undergraduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discount of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance,including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
Citizens Bank Student Loan Eligibility: Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower/eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank- participating school.
Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
|2.84% – 10.97%1||Undergraduate, Graduate, and Parents|
|2.75% – 10.65%*,2||Undergraduate and Graduate|
|2.80% – 11.37%3||Undergraduate and Graduate|
|3.52% – 9.50%4||Undergraduate and Graduate|
|4.22% – 7.81%5||Undergraduate and Graduate|