Student Loans For Students With Bad Credit

Student Loans For Students With Bad Credit

If you've wanted to go back to school but are afraid your bad credit history will prevent you from getting a student loan, fear not! Three of the federal government's student loans work for people with bad credit because these loans don't require a credit check (a primary disqualifier for all types of loans). So, if you meet the Department of Education's other financial aid eligibility, you may qualify for federal student loans despite your bad credit status.


Just keep in mind that a student loan is just as serious and significant a debt as any other kind of loan. Returning to college is a worthy goal, but you'll want to plan carefully and take out the smallest federal student loan possible in order to avoid deepening your financial woes.

How to Apply for No-Credit-Check Federal Student Loans

To apply for the student loans you can get despite bad credit, you'll need to complete a FAFSA, or Free Application for Federal Student Aid. Beyond loans, the FAFSA also calculates your eligibility for federal grants and scholarships, which, unlike loans, don't need to be repaid. Many private and school-based scholarships also require you to fill out the FAFSA. This only benefits you because the more grants and scholarships you can get, the smaller the student loan you'll need, lightening your financial burden.


Federal student loans for students with bad credit include Subsidized Stafford Loans, Unsubsidized Stafford Loans, and Perkins Loans. All three types of loans are available to undergraduate and graduate students.


Subsidized Stafford Loans are restricted to students whose ability to pay for college is limited (as indicated by their FAFSA). If you qualify for this type of student loan, the federal government subsidizes it by paying the interest that accumulates on it while you're in school.


Unsubsidized Stafford Loans are not restricted to low-income students only; they're available to anyone who applies. So if your credit is bad but your income is too high to qualify you for a Subsidized Stafford Loan, you should still be able to get an Unsubsidized Stafford Loan. Since it is unsubsidized, you pay the interest on it right from the start, even while you're in school.


Perkins Loans are reserved for students with extreme financial need and consequently have a very low interest rate. Perkins Loans are also government-subsidized.

Looking Before You Leap into Student Loan Debt

So there's the good news: there are student loans available to students with bad credit. However, before jumping feet first into a new financial commitment, you'd be wise to consider all the ways you might minimize your need for loans. In fact, if you're already in financial hot water with a bad credit score, a student loan should really be your last resource for college funding.


Here are some ideas:


Create a budget. Before you take on a significant financial burden like a student loan, do the math. Look at what you earn, how much you spend, and how you spend it. What can you save instead of spend?


Pay off the debt you have. If you're already carrying debt along with your bad credit score, pay off that debt before taking on any more. Although these federal student loans give you a break with their flexibility and low interest rates, they are the real thing. If already you have bad credit, the last thing you'll want to do is default on a student loan- even a federal one.


Choose a school that fits your budget. When considering schools, compare overall costs at different schools offering similar degree programs that interest you. If you can find a good program at a less expensive school, you may be able to get your tuition and fees fully covered by financial aid you don't have to repay, such as the Pell Grant or other federal, state, and school-based grants and scholarships.


Base the amount you borrow on the salary you'll earn after graduate. Financial aid experts recommend that you limit your student loan to an amount that, after you graduate, requires a monthly payment of no more than 10% of your expected monthly gross income. For example, if you anticipate a salary of $40,000 a year after you complete your degree, you will not want your monthly loan payment to be more than $333.


For interest rates, fees, borrower limits, and more details on student loans for students with bad credit, visit the website www.educationgrant.com.


Pursuing higher education with the goal of enriching your quality of life is a great idea, but probably not if the financial obligation leaves you with debt you're repaying the rest of your life. And just because the federal government provides student loans for students with bad credit doesn't mean the money should be borrowed without careful consideration. The best kind of debt to have is none at all.