Best Student Loans for Bad Credit: 8 Options for 2024

Enrolling in a college degree program can help improve your career options after graduation, but the price tag that comes with higher education can cause some sticker shock.

According to data from the College Board, students are on the hook for approximately $34,790 if attending a private college and $20,310 for public institutions for the 2023-2024 school year. Public two-year colleges set students' wallets back $3,990, on average.

Submitting the Free Application for Federal Student Aid (FAFSA) can help make college more affordable with access to low-interest student loans, work-study options, or grants, depending on your family's financial status. However, federal student aid options don't always cover the full cost. 

Private student loans can help bridge the gap between federal financial aid limits and the total cost of attending, but it can be more difficult to access this funding if you have bad credit. 

But don't count out college if your credit is less-than-perfect. You can still get a private student loan from certain lenders — here are our picks for the best options:

• Ascent
• Citizens
• College Ave
• Custom Choice
• ELFY
• INvested
• MEFA
• Sallie Mae

Compare current rates for bad-credit student loans

Best student loans for bad credit

Other lenders to consider

Other lenders like SoFi may be worth considering for bad-credit student loan options. SoFi has a generous no-fee policy, which means you won’t have to pay any origination fees, late fees, or fees for insufficient funds. It also offers cosigner release after 24 months of consecutive, on-time payments. Reduced payment and forbearance options are also available in times of financial hardship.

RISLA’s nonprofit student loan program offers flexible repayment plans, including income-based repayment and forbearance for borrowers experiencing financial difficulties. Additionally, RISLA rewards professional growth with opportunities like $2,000 in loan forgiveness for interns and zero interest on student loans for Rhode Island nurses for up to four years.

EdvestinU student loans require a minimum annual gross income of only $30,000 for individual borrowers or cosigners. The lender supports students by allowing deferment while enrolled at least half-time in school, and it provides options for economic hardship deferment during repayment. EdvenstinU also offers cosigner release after 24 months of on-time, consecutive payments. 

Federal loans for bad credit

Federal student loans can offer a lifeline if you have a less-than-ideal credit score. Most federal loans don’t require a credit check, making them the best option for borrowers with bad credit. Interest rates for federal student loans are fixed and set annually — meaning everyone who takes out a loan during the same period will pay the same interest rate, regardless of credit score.

Direct Subsidized Loans offer the added advantage of the government paying your interest while you’re in school and during other periods of deferment. However, this loan is only available to undergraduate students who demonstrate financial need via the Free Application for Federal Student Aid (FAFSA).

Direct Unsubsidized Loans are available to undergraduate and graduate students, regardless of financial need. But unlike subsidized loans, you’re responsible for paying all the interest, which starts to accrue as soon as the loan is disbursed. 

Methodology

FOX Money evaluated these student loan lenders based on interest rates and origination fees, loan amounts, loan terms, discounts, whether cosigners are accepted, and more. FOX Money’s team of experts gathered information from each lender’s website customer service department, directly from our partners, and via email support. Each data point was verified by a third party to ensure it was accurate and current.

Private vs. federal student loans for bad credit

The main difference between federal and private student loans is the institution giving you the loan and the terms that come with it. 

The government offers federal student loans with benefits like fixed interest rates, income-driven repayment plans, and options for deferment or forbearance (where you can temporarily stop making payments under certain conditions). They also provide opportunities for loan forgiveness in certain situations, such as employment in public service or education. 

You don’t need a credit check for most federal student loans (except for PLUS loans), and you won’t need a cosigner either. 

On the other hand, private Student Loans are offered by banks, credit unions, and other private lenders. Interest rates for these loans can be fixed or variable and are often based on your credit score, meaning you might need a cosigner to get the best rates. 

Private loans also don't typically offer as generous repayment terms, and you're less likely to find options for loan forgiveness. They also don’t have income-driven repayment plans, and the options for deferment or forbearance are not as flexible.

Related: How do student loans affect my credit score? 

Eligibility requirements

Private lenders establish underwriting criteria to minimize the risk of accepting a borrower who is highly likely to default on their loan (i.e., not making payments on time or at all).

Generally, some factors they consider include your:

• Credit score. When applying for a private student loan, the lender will usually perform a hard credit check to assess your record of repaying debts and determine whether you’ve had late payments, missed payments, defaults, or bankruptcies. 
• Income. To determine if you can repay the loan, they’ll look at how much you earn and your other assets. 
• School. Private lenders will also check whether you’re enrolled at an eligible school and/or program. 
• Degree program. Your eligibility can be affected by whether you’re pursuing an undergraduate, graduate, or postgraduate degree. 
• Enrollment status. Lenders want to know whether you’re attending school half- or full-time.

You might need help fulfilling some of these requirements, especially if you’re just out of high school. Similarly, returning students might have made poor borrowing decisions in the past or not have adequate income to qualify for a private loan.

Having no credit or bad credit can be problematic for students who need a private student loan. However, bringing on a cosigner with strong credit could help you qualify. 

Do I need a cosigner?

Adding a cosigner to your private student loan application can be helpful in a couple of ways. If you don’t meet lenders’ minimum eligibility criteria, a cosigner with strong credit can help you qualify for the loan. Additionally, a cosigner might help you get lower rates than you could get alone.

A cosigner is a trusted person who accepts the financial responsibility for repaying your loan if you don’t. As the primary borrower, you’re still responsible for making your payments. However, if you fail to repay the debt, the lender or its debt collection agency will seek payment from your cosigner. Also, late or nonpayments negatively impact their credit — and yours.    

Not all private lenders accept cosigners on their education loans. Those that do might offer a cosigner release option. After meeting the lender's specific payment requirements, you can remove your cosigner from your loan agreement. For example, you might be required to make at least 24 on-time monthly payments or meet other requirements before getting approved for cosigner release.

How to get student loans with bad credit

Here’s how to improve your chances of getting a loan:

• Submit the FAFSA. Apply for federal student loans first, regardless of your credit situation. Submitting this form each school year lets you see if you qualify for a fixed-rate Direct Loan and other types of federal aid. Many states also use this form to determine your eligibility for state-funded aid.    
• Find a cosigner. A cosigner is typically a relative, like a parent, grandparent, or sibling. Your spouse can also be a cosigner on a private education loan. Regardless of who agrees to cosign your loan, they must meet the lender’s minimum credit score requirement and other borrowing criteria. 
• Improve your credit score. Raising your credit score can position you as a stronger applicant on your next private student loan application. This process takes time, but making full, on-time monthly payments and paying down your debts on other loans and credit card accounts are just a few ways to improve your credit.

Frequently asked questions

Can you get student loans with a 500 credit score?

If your credit score is 500, you may still be able to access student loans for school. The first option to consider is federal student loans. Generally, federal loans don’t require a credit check, and you can choose from subsidized and unsubsidized loans, depending on your eligibility. For private student loans, some lenders let you apply with a cosigner with strong credit, which might improve your odds of getting a student loan at a lower rate.

Can you get the FAFSA with bad credit?

You can apply for the Free Application for Federal Student Aid (FAFSA) regardless of your credit history. Your credit isn’t a factor for most federal student loans; however, you must meet the basic eligibility requirements (citizenship status, enrollment, etc.) to qualify for federal aid.

What is the minimum credit score for a federal student loan?

The Department of Education doesn’t have a minimum required credit score for its Direct Loan program. Its subsidized and unsubsidized loans don’t require a credit check. A credit check is performed for Direct PLUS Loans; you must not have adverse credit. If you have bad credit, you might still qualify for a PLUS loan if you meet certain requirements.

What is the easiest student loan to get?

Federal student loans are the easiest loans to get since most don’t have a minimum credit requirement. Your federal loan eligibility is determined using the same FAFSA application you’d use for other student aid, like grants and federal work-study.