Many students need to borrow money to complete their education, but you may be worried about your ability to do that if you have a low credit score or no credit history.
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The good news is, your imperfect credit shouldn't deter you as there are many options for student loans for bad credit. In fact, depending on your situation, you should likely be able to qualify for federal student loans at an affordable rate as well as for private student loans either with or without a cosigner.
While it may take a little extra effort to find the loan that's right for you, it's worth exploring the loans available to you so a lack of financing doesn't derail your efforts to achieve your academic goals. Here are some of your best options.
Private student loans
While some private lenders require cosigners for borrowers who have low credit or no credit history, not all do. In fact, there are private loan lenders that cater to bad credit borrowers and that are willing to look at other metrics such as your job prospects after graduation.
You can explore these options by visiting Credible to see which lenders may be open to providing you with an affordable loan even with your current credit report.
Private student loans with a cosigner
Private student loans don't offer the same borrower benefits as federal student loans, but they can still be a good option if you have exhausted eligibility for federal aid. However, private lenders generally have stricter credit and income requirements for who can qualify.
If you have a low credit score, one of the best ways to get an affordable private student loan is to apply with a cosigner. A cosigner with a better credit score could make it possible for you to obtain a loan you'd otherwise be denied or to get a much better interest rate so borrowing becomes more affordable.
You can visit Credible to view a rates table so you can compare fixed and variable interest rates from multiple private student loan lenders at once to see how much borrowing will cost you.
You can also use an online student loan calculator to determine both monthly payments and total repayment costs at different interest rates.
Federal student loans
Federal student loans are the best option for borrowers with imperfect credit because your credit score doesn't matter for most loan types.
Direct Subsidized Loans and Direct Unsubsidized Loans are available regardless of your credit history at low fixed rates that are the same for every borrower each academic year. You can also qualify for a Direct Consolidation Loan regardless of credit, which allows you to group multiple existing federal student loans into one new loan with more flexible repayment options.
Direct PLUS Loans are another federal loan option, but while these aren't available if you have adverse credit, there's a very specific definition of what that means. "Adverse credit" includes having outstanding debts with a combined balance of $2,085 or higher that are at least 90 days delinquent or in collections or having a foreclosure, repossession, bankruptcy, tax lien, default, wage garnishment, or write-off of federal student debt within the past five years. And even if you have black marks on your record that qualify you as having adverse credit, you could still obtain a PLUS loan if you document extenuating circumstances or find an endorser without these issues.
To obtain any of the federal student loans available to bad credit borrowers, you'll need to complete your Free Application for Federal Student Aid (FAFSA). There are annual and lifetime borrowing limits for subsidized and unsubsidized loans. Subsidized loans also require you to show financial need, although neither of the other two types of federal aid are means-tested.
Finding the best student loans for your situation
While there are opportunities to find student loans for bad credit borrowers, improving your credit score can open up the door to borrowing with your choice of lenders and may enable you to get more affordable rates on private student loans.
You can boost your score by paying your bills on time, making sure your credit report is free of errors and keeping your credit card balances low.
The sooner you develop a positive payment history, the easier it will be to borrow not just for school but for anything you need to get your career started after graduation.