How To Get Approved For Student Loans With Bad Credit

Most parents will do anything to help their children get a good education and succeed in life, and that may eventually mean getting approved for private student loans with bad credit.

Any parent with a child in college is likely aware of the exorbitant price tag of a college education nowadays. Over the past three decades, the cost of college tuition has increased more than four times that of the average rise in family incomes.

Because of this, families have had to turn to loans and other financing to help students with obtaining their college degrees. But unfortunately, not everyone has good credit. While some may feel that this could hinder them from finding the aid they need, there are still actually many student loan options available to you if you have a bad credit history. Below, we will discuss how to get a student loan with bad credit.

How to Get Approved For Student Loans With Bad Credit

How Credit Can Affect Your Student Financing

When it comes to any type of borrowing, your credit can play a key role – and lenders in the private student loan arena are no different. This is because the lender wants to be assured that they aren’t taking on too much risk in terms of being paid back for the funds that they are loaning you.

There are three credit bureaus that creditors report to. These are Equifax, Experian, and TransUnion. Some creditors will report to all three, while others may only report to one or two. Although each calculates scores just a bit differently, overall, credit scores can range from a high of 850 down to a low of 300.

In terms of what is viewed as “good” or “bad” credit, most lenders will break the scores down as follows:

  • Excellent – 850 to 721
  • Good – 720 to 681
  • Average – 680 to 621
  • Low – 620 to 581
  • Poor – 580 to 501
  • Bad – 500 to 350

A private lender will typically evaluate a student (or a student and parents) based on their credit score, and will not generally loan funds to anyone who has a score that is lower than 620. The good news is that your credit score can – and often does – change regularly. So, if it is in a lower range currently, you can usually bring it up by making payments on time and / or removing any negative information that may be inaccurate on your credit report.

Student Financing Options with Bad Credit

If your credit falls into the poor or bad credit category, it doesn’t mean that getting a student loan won’t be possible. You may just need to narrow down your options. The best place to start in this case is with federal financial aid.

One of the primary reasons that federal student loans are a good option is because the federal government doesn’t check the credit history of applicants for student loans. This can make the process of approval much easier on a federal loan than going the route of financing through a private lender.

Although there are numerous options available via the government in terms of student funding, there are some that are more likely to be better than others if you have bad credit. These include the following:

Stafford Loan

There are actually two forms of the Stafford Loan. One is a need-based version that is based on income. The government pays the interest on this loan while the student is still going to school, and during the loan’s “grace period” before the repayment begins. This is referred to as a “subsidized” Stafford loan. These loans are only available to undergraduate students.

There is also an “unsubsidized” Stafford loan. This version of the Stafford loan is not based on income. The school determines the amount that can be borrowed, based on the cost to attend the institution, as well as any other financial aid that the student is receiving. With an unsubsidized Stafford loan, interest must be paid during all periods. These Stafford loans are available to undergraduates, as well as to graduate and professional degree students.

In order to be eligible for either type of Stafford loan, it is necessary to be enrolled at least half-time in a program that leads to either a degree or a certificate that is awarded by the school.

Perkins Loan

Perkins loans are low-interest federal student loans that are available to both undergraduate and graduate students who have what is considered to be exceptional financial need. As long as you are attending school at least half-time, you do not need to begin making repayments on a Perkins loan until nine months after you either graduate, leave school, or drop below half-time status as a student.

With a Perkins loan, the school actually acts as the lender, so repayments are made to the college or university. However, it is important to note that not all colleges and universities participate in the Perkins Loan program. Therefore, it will be necessary to check with your school in order to ensure that it is a part of this program if this is an area of financial aid that you want to pursue.


Students or parents may also obtain a PLUS loan. These federal loans are available directly to graduate or professional students, as well as to parents of dependent undergraduate students through the United States Department of Education.

Although a credit check will be performed during the application process, you may still be able to qualify for a PLUS loan if you are able to obtain a cosigner who has a good credit standing and / or you are able to document that your adverse credit history is due to extenuating circumstances.

How to Improve Your Chances for Financing with a Cosigner

Having a family member who has a strong credit history act as a cosigner can help a great deal in getting your student loan approved. This is especially the case if you are applying for private funding through a lender.

By having a financially responsible party on the application who has a high credit score, it can provide more assurance to the lender that payments on the loan will be carried out as promised. This can also help you to possibly obtain a lower interest rate on the loan, in turn, reducing your monthly payment amount.

Where To Go For Student Financing

Having low (or no) credit does not necessarily mean that a student loan will be impossible to obtain. There are still several avenues that you can take, including government financial aid, and even private loans with a cosigner. Knowing which loans you may be eligible for can help you to narrow down your options and get directly to your best potential options more quickly.
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