A student loan for bad credit may seem impossible to find. However, there are many options available for students or parents of students with bad credit.
There are even options for private student loans with no cosigners and for students with no credit history as well as consolidating student loans with bad credit.
Read on to learn more about how you can improve your student finances even when you have bad credit.
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Student Loan For Bad Credit: 7 Alternative Solutions
1. Direct Subsidized Loan
Otherwise known as Subsidized Stafford Loan, this is one of the most common types of federal loans.
As it is a federal loan, it does not consider your prior credit history. This is one of the best college loans for bad credit, as the government shoulders your interest rates while you’re studying.
This loan has a fixed interest rate of 4.45%. However, it is only available to undergraduate students. You also have to prove you’re a student in need by applying for the Free Application for Federal Student Aid (FAFSA).
2. Direct Unsubsidized Loan
This is another version of the Stafford Student Loan. As opposed to a Direct Subsidized Loan, you don’t have to prove you’re a student in need to qualify for a Direct Unsubsidized Loan.
Since this is another federal loan, it doesn’t consider your credit history. It is also available for graduate students.
For Direct Unsubsidized Loans, you are responsible for paying your own interest. The fixed interest rate for graduate students is at 6%, which is higher than the undergraduate rate of 4.45%.
3. Direct PLUS Loan
If you’re a graduate student or a student dependent on your parents, you can try applying for a Direct PLUS Loan.
While this federal loan does look into your credit history, it is not as strict as most private loans. And even if you do have adverse credit history, there are still ways to obtain this loan.
You can get an endorser or someone who will promise to repay your loan if you fail to do so. Or you can prove to the Department of Education you’re under very pressing financial circumstances and need the loan badly.
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4. Direct Consolidation Loan
If you have several federal student loans, you might want to try getting a Direct Consolidation Loan to ease the payments. You basically take out a loan that gathers together all your preexisting loans, so you only have to make one payment a month, instead of several.
That way, your repayments become more convenient and come at an interest rate that’s potentially more beneficial to you.
5. Private Loan
Many private lenders are very strict about credit scores. There are some companies that are more flexible and offer private loans for bad credit.
Lenders like Sixup and Ascent Independent Loan do not require a long credit history to be eligible for a loan. Check out their plans to see if any of them are for you.
6. Loan With Co-Signer
Usually, federal loans and university funding aren’t enough.
However, getting a cosigner is one way to obtain college loans even with bad credit. The loan will be made in the name of the cosigner, preferably someone with good credit.
7. Loans for Health Students
If you are a student in health care or the health sciences, these loans from the Department of Health and Human Services Assistance Programs might be of interest to you.
They specifically target disadvantaged students. Ask your school if you might qualify for one of these loans.
For more on the student loan for bad credit, watch the video below from JonStudentLoan:
A student loan for bad credit will vary depending on which type you apply for. But if you know where to look and have the right help, you might actually get the best loan available.
You may also consider other funding options such as “peer-to-peer borrowing” or a personal loan. Lessening your expenses and saving more can also help you get the funds needed except it will take some time.
Which among the options on the student loan for bad credit do you think you’ll have a hard time taking advantage of? Please share your choices and why in the comments section below.
(Bonus Tip: Need even more tips for Student Loans? The Ultimate Student Loan Resource Library has 10 of the most important things to know about student loans so you can pay off your loans the smartest and easiest way possible. Click here to learn more and to get the free guide.)
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Editor’s Note: This post was originally published on February 21, 2018 and has been updated for quality and relevancy.
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