College Student Loans for Bad Credit

Private student loans are contingent on the borrower's/student's credit worthiness and the perceived ability of the student to discharge the loan. Hence, college (student) loans for bad credit borrowers are synonymous with federal student loans. Obtaining these bad credit student loans is not a difficult task since students are not expected to have a credit history. For most students, availing a student loan and repaying the borrowed sum helps them build their credit score and credit history. Read more on bad credit loans.

Procuring College (Student) Loans with Bad Credit

As mentioned earlier, availing a college loan with bad credit is feasible provided the borrower is interested in procuring a federal student loan. Federal student loans fall into 2 categories, viz. subsidized and unsubsidized.

Federal Stafford Loans: Unsubsidized Federal Stafford loans, that have been disbursed on or after July 1st, 2009, carry an interest rate of 6.8 percent regardless of the credit history of the borrower. The repayment period for these Stafford loans ranges between 10 and 25 years depending upon the amount borrowed and the type of repayment plan. Unsubsidized Federal Stafford loans are administered under the Federal Family Education Loan (FFEL) program and the Federal Direct Loan program. The latter can be obtained from lenders participating in the FFEL program while direct loans, as the name suggests, are disbursed directly by the Federal Govt. Unlike subsidized student loans, unsubsidized Federal Stafford loans are not need based.

Subsidized Federal Stafford loans, that have been disbursed on or after July 1st, 2009, have a fixed interest rate of 5.6 percent. Moreover, the govt. pays interest on the loan, during the deferment and the grace period, in stark contrast to unsubsidized loans where deferments, if allowed, accumulate interest that have to be borne by the student in addition to the usual interest payments. Subsidized Federal Stafford loans are strictly need based.

Federal Perkins Loans: In addition to subsidized and unsubsidized Federal Stafford loans, Federal Perkins loans are available to students, who demonstrate exceptional financial need, regardless of their credit history. The rate of interest on Perkins loans, is less than that on subsidized Federal Stafford loans. Moreover, repayment on Federal Stafford loans has to begin after 6 months of graduation while repayment on Federal Perkins loans is expected to commence following a nine-month grace period after graduation. For more on subsidized and unsubsidized loans, one may refer to the article, 'Subsidized Vs Unsubsidized Loans'.

Student Loan Consolidation

Students, who are finding it incredibly difficult to repay the borrowed sum, can opt for student loan consolidation. Bad credit is again not a deterrent to procuring consolidation loans since these loans are available to borrowers who are delinquent or have defaulted on the student loans. Of course, there are certain repayment conditions, like three voluntary, on-time, full monthly payments, that have to be met in lieu of the borrowed sum in order to obtain a consolidation loan. Direct Consolidation loans and FFEL Consolidation loans are available for consolidating subsidized and unsubsidized FFEL and Direct Stafford Loans. Similarly, Federal Perkins loans can also be consolidated.

Parents and guardians, who are interested in putting their wards through school, can procure Direct and FFEL PLUS loans and can opt for consolidation in the event of being unable to repay the same. However, unlike the aforementioned 'college (student) loans for bad credit', PLUS loans can be procured only if the borrower's credit history is not adverse. As far as consolidation loans go, FFEL consolidation loans are also disbursed on the basis of the borrower's credit history while Direct PLUS consolidation loans can be obtained by the parent/ward without having to undergo any credit checks.