Federal student loans can be the perfect solution for those with poor credit histories, since they do not require a credit check and come with low interest rates.
Private student loans may be beneficial if you’re having trouble making ends meet after exhausting all scholarship and grant options or have reached your federal loan limit. While these loans carry higher interest rates than federal student loans, they can still help students cover their education-related expenses.
Federal Student Loans
If you have bad credit, there are still ways to finance your education. Federal student loans may be the best option for some borrowers since they do not require a credit check or cosigner and usually offer more repayment options than private student loans do.
Federal student loans can be an excellent option for borrowers with bad credit, but it’s essential to do your research and select the correct lender. There are various types of federal student loans, including subsidized and unsubsidized ones, each with its own set of requirements.
Direct Subsidized Loans: These loans are designed for undergraduate students who demonstrate financial need, and help cover tuition, fees and other living expenses. The federal government pays the interest on these loans while you attend school and after you graduate or drop below half-time enrollment. Available Term Lengths: 10-25 years depending on repayment plan
Even if you do not have other financial aid, you can apply for a subsidized loan if the school in which you attend has been approved by the government. Furthermore, they cover certain costs of student loan deferment periods – times during which repayment of your loan is delayed but not required.
Loan interest on these loans tends to be lower than private loan interest and they don’t collect interest while you are in school or during deferment. They may be an attractive option for borrowers who lack other sources of funding to cover college tuition expenses, plus some may qualify for loan forgiveness programs.
These loans are for students with bad credit and can be used to cover a range of costs, such as living expenses, textbooks and supplies. Furthermore, they may cover additional expenses not covered by other forms of financial aid like health insurance and transportation.
These loans, though more costly, may be an advantageous choice for borrowers with poor credit who require low-cost education financing. Private student loans tend to have stricter eligibility criteria and higher interest rates compared to government-backed options.
Private Student Loans
Federal student loans may not be enough to cover the full cost of education, so private student loans from banks, credit unions and online lenders may be an alternative. These funds can be used for college or other postsecondary educational pursuits.
If your credit is less than perfect, getting a private student loan can be tricky. But with some research and finding an affordable lender who offers reasonable rates and fees is possible. These loans offer students the chance to fund their education without needing to pay out-of-pocket for tuition or living expenses.
When looking for a private student loan, there are various factors that will influence the interest rate and costs. Some lenders take into account future income potential rather than credit history, which could give you a lower interest rate and more repayment flexibility.
You may find lenders who don’t require a co-signer, which could increase your chances of approval even with poor credit. A co-signer is someone with good credit who agrees to act as a guarantee for you should you default on the loan.
Some lenders, such as EDvestinU and Citizens Bank, provide low-interest student loans for students with bad credit. Plus, they offer a six month grace period extension so you can make your payments while still in school.
Another viable option is Ascent, which provides private student loans for undergraduates, graduate students and professionals. Its non-cosigned loans are outcomes-based — meaning you can qualify based on your grades and future earnings potential rather than just on credit score.
Ascent offers a range of loan options for both undergraduate and graduate students, starting at $2,001 with maximum borrowing amounts up to $200,000 for undergraduates and $400,000 for grads. Furthermore, Ascent provides flexible loan terms ranging from 5 to 20 years.
Private student loans generally carry higher interest rates than federal student loans, so it’s essential to shop around for the best deal when taking out a private student loan. Look out for lenders that don’t charge origination or prepayment fees and opt for a fixed-rate loan so your interest stays consistent throughout its entirety.
CommonBond provides a range of loans for undergraduate, graduate, MBA, dental and medical students. Along with traditional fixed rate and variable rate options they also provide interest-only and deferred repayment plans so you can pick which payment option best fits your budget.
Repayment terms are an integral component of student loans, and CommonBond provides a range from five to fifteen years. They also offer a 10-year hybrid loan that allows you to make payments on both fixed-rate and variable-rate loans simultaneously, so you can select the option that works best for your situation.
CommonBond stands out among other private student loan companies by not charging origination or application fees on its loans. They do, however, charge late fees of either 5% for any amount unpaid or $10, whichever is greater, plus a $5 fee for returned checks.
Other than these fees, CommonBond doesn’t charge any other hidden costs or prepayment penalties for loans. This makes it a more advantageous choice than some of its competitors for students with bad credit histories.
They offer free financial counseling through a Money Mentor for all their loans. This counselor can assist with key decisions regarding finances and provide suggestions on how to save money in the future.
If you need to refinance your student loans, CommonBond provides a two-minute online assessment that will let you know how competitive your current rate is. From there, you can compare rates from various lenders and find the one best suited to your requirements.
In addition to their excellent service, they offer a referral program with the potential of earning $200 for every person you refer who takes out a loan or refinances through your link. To take advantage of this offer, you must have access to a PayPal account.
Another advantage of refinancing with CommonBond is their forbearance policy, which helps you manage financial hardships. They will waive up to 24 months of monthly payments if needed, which can be especially helpful if you’ve recently lost a job or experienced another major life change such as divorce.
Edly offers an alternative to traditional private student loans in the form of income-based repayment loans. This loan type permits students to repay their debt only after they secure employment at or above a predetermined minimum salary threshold.
Edly stands out among other income-based repayment solutions because its rates and conditions are tailored to a student’s degree and school or program. This allows Edly to identify students with high earning potential and offer them more flexible, affordable funding options than traditional student loans.
Instead of relying on a credit check, Edly utilizes their tech platform and state-chartered bank partnership to primarily underwrite degree and school programs based on value and earning potential. This approach has enabled Edly to provide more flexible, affordable education funding options for students pursuing degrees in nursing, teaching, journalism, social work, STEM fields, accounting and beyond.
Edly offers a more accommodating model, making it easier for students with bad credit to access funding through IBR loans. There are no minimum credit score requirements, cosigners aren’t necessary and no credit history is needed in order to apply for an IBR loan.
Since 2019, Edly has funded over 4,000 students and can provide education financing to over 1,800 of America’s top colleges and universities. All of its IBR loans are secured personal student loans issued by FinWise Bank – a Utah chartered commercial bank and member of the FDIC – at no extra cost to students.
To apply for an IBR Loan through Edly, you’ll need to fill out a brief prequalification form online. This takes less than a minute and asks about your school, field of study, graduation date, how much money you require and some contact information.
Once you submit your application to Edly, they will review it and send you an official offer of funding within minutes – which you may accept or decline.
It is essential to note that we only recommend Edly as a last option for college students who have no other options. Before considering private student loans, borrowers should exhaust all other sources of funding – scholarships, grants, savings accounts, earnings from work or contributions from family members – along with federal student loans.