It is possible to get student loans with no credit history required to get the money you need for college. Going to college is an expensive experience that many people dread going through. Parents will often set up college funds for their children at an early age, and still, there may not be enough money in the fund to completely pay for college. Many students will work part time or even full time jobs to pay their way through college. Although the current economy isn’t promising, tuition costs are rising each year. The expense of college can even turn perspective students away altogether.
Student loans are alternative ways to paying for college. However, many young students will not have the credit history required to take out loans to pay for college. The federal government has established a way, however, for students to get student loans with no credit history. Before we explore these options, let’s look at the two types of loans offered for college.
Student Loans With No Credit History Required
Private Student Loans
A private student loan is one way to pay for college. There are certain requirements needed for private student loans. These include:
- A good credit history
- A cosigner
- Possible collateral
Private student loans are just as they are described, private lending companies lending you money for college. They also differ in other from federal student loans in other ways too.
- Higher interest rates
- Higher loan origination fees
- Interest charged on the loan during college
- Ability to borrow more money
- Fewer options for repayment
Federal Student Loans
A federal student loan is the other option for paying for college. The requirements for a federal student loan are different from a private student loan. These include:
- No credit history required
- Bad credit history is OK
- No cosigner needed
- No collateral needed
Federal student loans are backed and guaranteed by the government and they also differ from private student loans in a number of ways:
- Lower interest rates
- Lower origination fees
- Options for deferred interest until after graduation
- Flexible repayment options
Requirements for Both Federal and Private Student Loans
Whichever type of loan you choose, there are certain requirements that must be met in order to get a federal loan and most private student loans. The basic requirements are:
- Must be enrolled at an accredited college or university
- Enrollment must be at least half time
- Half time includes 9 hours undergraduate and 4 hours graduate
- Must be a U.S. citizen
- Must have a Free Application For Federal Student Aid filled out (FAFSA)
- A FAFSA will require information from your federal tax returns, so these will need to have been done too
Federal student loans are the ideal types of loans for college tuition because these are student loans with no credit history required. Therefore, federal student loans will be the emphasis for the remainder of this article.
Free Application for Federal Student Aid (FAFSA)
When a student is applying for student loans, grants and even scholarships they must first fill out a Free Application for Federal Student Aid or FAFSA. This is the first step toward receiving any money whatsoever. This application, like its name, is a free application to fill out. It will ask you about your dependent or independent status, the schools you are planning to attend and it will also ask for financial information about you and/or your parents. This will include information from the most recently filed income tax return. The schools you are planning to attend will get all the information gathered from this application and be able to assist you in obtaining grants, scholarships and federal student loans.
Types of Federal Student Loans
Types of federal student loans include:
- Federal Perkins Loans
- Stafford Loans
- Plus Loans
Each of these loans have different functions that will be discussed below. All but one of these loans are guaranteed and backed by the federal government and are student loans with no credit history.
Perkins Loans
This type of loan is made on behalf of your school. In other words, the school will serve as the lender of the loan and is the one you will make your loan repayment to. The interest rate on this loan is 5% and the repayment period is generally 10 years. The amount of money you can borrow is up to $5,500 per year.
Stafford Loans
Stafford loans are the most widely known and most widely used student loan because these loans are made regardless of financial need. A bank will serve as the lender for your loan and the interest rates are set annually by the government and are generally between 5-7%. The amount borrowed increases for each year of enrollment beginning with $9,500 for the first year. The total maximum amount borrowed is $57,500 for undergraduate students. There are two types of Stafford Loans that are awarded depending on financial need.
- Subsidized Stafford Loan - The federal government will pay for the interest gained on this loan while the student is enrolled in school. It will begin to draw interest upon graduation and during loan repayment.
- Unsubsidized Stafford Loan – The interest on these loans will accrue during the deferment period while the student is in school. These amounts should only be borrowed if necessary or will be awarded to those persons that don’t show a financial need.
PLUS Loans
These are student loans that can be taken out by the parents of undergraduate dependent students. The interest rate is 8.5% and is only for borrowers with good credit.
Aggregate loan limits for all of these loans are higher for dependent students and graduate level students. Your college financial aid counselors will be able to assist and guide you as to which loan is best for you.
Borrow Smart
It is a good idea to borrow only what you need for tuition, books and other educational expenses. One of the biggest problems with students, especially dependent or graduate students, is to take out extra money that they don’t necessarily need. This leads to a bigger repayment amount at the end of their college career.
Although it is possible to pay for college by getting student loans with no credit history required, the best thing you can do to establish a positive credit history after graduation is to pay your student loans back in full and on time. College is an expensive venue, but in this country, it’s possible to get the scholarships, grants and student loans that you need pay for your college expenses.