Many college students are faced with the unfortunate question of how to get a student loan with bad credit. Much like any other type of loan, acquiring a student loan with bad credit is difficult; banks prefer to lend money to students with good credit history to ensure the loans will be adequately paid back when the repayment period begins. It is a common myth that no credit, limited credit history and bad credit mean you are unable to receive financial assistance for college. Before you make the decision to forgo college because of your poor credit history and the inability to pay for books and tuition without assistance, note that you still have options for obtaining financial assistance; even with bad credit.
How To Get A Student Loan With Bad Credit
Private Student Loans
Private student loans are exactly what they sound like; private loans issued to students with good credit by banks. Unfortunately, because your credit history is poor it is not likely you will find a bank that is willing to issue a private loan to you. You may ask yourself, how do I get a student loan with bad credit? Before you become discouraged, know that a private student loan is entirely obtainable to you, even with poor credit, so long as you have a co-signor with impeccable credit history.
A co-signor doesn’t have to be one of your parents; it is perfectly acceptable to use a friend or relative with good credit history to obtain a private student loan so long as that person trusts you enough to co-sign a loan with you. It is imperative you are able to find a co-signor with very good credit history or your request for a private loan will be denied.
Talk to your parents and find out what their credit history looks like. While it’s easy to assume your parent’s credit history is good, it isn’t always the case and they may be unable to assist you in co-signing a loan. If this is the case, talk to other family members or even friends to discuss your options with them. It may be simple to find a trusted friend or family member to co-sign a private loan for you, but it may also prove just as difficult and you will find yourself asking again, how can I get a student loan with bad credit? This means you need to look into other options for how to get student loans with bad credit.
Federal Student Loans
Stafford loans, both subsidized and unsubsidized are the go-to college loan for students with bad credit; these federal loans are given to students with absolutely no credit check required. The funds issued through federal student loans are based on a number of determining factors, such as whether or not you are a depended or independent student. Both will receive funds, but the amounts of funds you receive are more if you are an independent student. In addition, professional adults and Grad students receive nearly $20,000 per year in low-interest loans.
To qualify for a federal student loan you are required to file the Free Application for Federal Student Aid (FAFSA) at the beginning of each year. Depending on where you attend college, the deadline for filing the FAFSA changes but the earlier you file it after January 1, the earlier you will receive notification that you’ve been awarded federal student aid.
FAFSA
Filing the FAFSA is simple, though it can be time consuming. You can file online or you can print an application and mail it; online filing is significantly faster than paper filing. To file the FAFSA you must have certain information readily available to you, such as your Social Security Number, your school code, your income tax information, your dependent’s information – if applicable – and if you are a dependent student you are required to include your parents’ financial information from their most recently filed income tax return.
Once you file your FAFSA with the federal government there is a process to determining how much you qualify to receive in student loans. The government reviews the information on your FAFSA and sends you a student aid report (SAR). Depending on the method used to file your FAFSA you will receive either email notification that your SAR is available to view online or you will receive your SAR through the mail. On your SAR you will see information regarding how much your expected family contribution (EFC) is and how much additional student aid you need to pay for college this semester. Your SAR is also sent to the college or university you listed on your FAFSA application and it is then up to the school to provide you with information regarding the exact dollar amount you are eligible to receive in federal financial aid for the school year.
Loan Amounts
It is imperative that you keep in mind that all of your student loans must be repaid upon your exit from college, whether or not it is for graduation or because you decided to stop attending school. Because of this, it is important you borrow wisely and never accept more funds than you need to pay for school; tuition and books. With private loans you have the option to choose the amount you borrow and with federal student loans you are provided the amount you are eligible to receive and then given the option to accept all of the funds or only a portion of the funds. Always borrow responsibly.
Scholarships and Grants
Scholarships are not loans. Scholarships are funds given to you by an individual or a company that you are not required to pay back. Scholarships are not credit based but they are significantly more difficult to acquire than federal and private student loans. Grants, however, are often issued to need-based students by your school. For example, PELL Grants are awarded to students that exhibit extreme financial need based on the information you provide in your FAFSA. Your school reviews this information and issues PELL Grants to students that need them on a first come, first serve basis. Your PELL Grant does not need to be repaid – if you qualify for one.
Your poor credit history only affects a portion of your options when it comes to student loans. Even if you are unable to find a co-signor for a private student loan you are eligible to receive substantial federal loan assistance simply by filing a FAFSA with the federal government. These funds are guaranteed and will help you to pay for classes, books and other school related fees you encounter during the school year. How to get a student loan with bad credit is not something you have to worry about with these easy options available to you.