Can you get student loans with bad credit? The short answer is yes. The long answer is, that depends on the type of student loan.
You won’t find bad credit student loans designed specifically for students with poor credit. But you can qualify for federal student loans, which don’t take your credit score or credit history into account at all.
Private student loans might be available to you as well, but you’ll probably need to apply with a creditworthy cosigner to qualify. 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)
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 can qualify for federal student loans even 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, or 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 you need-based or non-need-based federal student loans.
If you have financial need, you might also qualify for grants, like the Pell Grant, or work-study funding. 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.
Explore private student loans for more funding
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 loans from a private company.
But if you have poor credit, all hope is not lost. To get around this 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 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 any conflicts before they occur.
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 the 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.
Be careful about taking on too much debt
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 your options for grants and scholarships. Consider a part-time job to earn extra money, and learn to 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 the 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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2 = CollegeAve Autopay Disclaimer: 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.
* 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.
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