Loans for Students with Bad Credit

Private student loans cannot be accessed by students without a good credit history, a favorable debt to income ratio and commendable earning prospects. A creditworthy co-signer may help students procure private student loans despite being straddled with a poor credit history.

Federal student loans, on the other hand, have been designed to help students realize their academic aspirations regardless of their financial situation. Generally, these loans are not contingent to the student undergoing credit checks. However, a student with adverse credit history cannot avail 'PLUS Loans for Graduates and Professional Degree Students' since credit worthiness is taken into account before disbursing these loans. The aforementioned loan is administered by the Federal govt. through the Federal Family Education Loan program (FFEL) and the Direct Loan Program. Students, who have applied for the maximum eligible annual loan under the Federal Stafford Loan Program, are eligible to procure PLUS loans.

Grants and Loans for Students with Bad Credit

Students are expected to apply for federal student loans by filling out the FAFSA (Free Application for Federal Student Aid). The following bad credit loans are available to students with bad or no credit history: Federal Stafford Loans, Federal Perkins Loans and Student Consolidation Loans. A financially constrained student may also be eligible to apply for the Federal Pell grant that absolves him/her of the responsibility of repaying the amount that is disbursed.

Education Loans for Students with Bad Credit

Federal Stafford Loans: Subsidized Federal Stafford loans are administered under the Federal Family Education Loan program and the Direct Loan program. Stafford Direct loans are obtained from the Federal government, while Stafford FFELs are disbursed by private lenders participating in the FFEL program. These loans are meant for students who are unable to afford the comparatively higher rate of interest on unsubsidized Stafford loans. The govt. assumes responsibility for interest payment until the borrower has graduated and assumes normal repayment of the loan. In addition to subsidized loans, unsubsidized Stafford Loans are disbursed by the govt. to students from all walks of life regardless of their credit history.

Federal Perkins Loans: Perkins loans are annual low interest loans offered to deserving students directly by the participating college. These loans allow the borrower to avail a nine-month grace period, following graduation, during which the student is not expected to repay the principal or interest on the loan. The rate of interest, on these loans, is less than that on subsidized Federal Stafford Loans.

Consolidation Loans: Direct Consolidation Loans and FFEL consolidation loans are available for consolidating subsidized/unsubsidized FFEL and Direct Stafford Loans. Federal Perkins Loans, Federal Nursing Loans, Health Education Assistance Loans and SLS loans can also be consolidated using federal consolidation loans. Since the facility of consolidating student loans is available to borrowers who are delinquent or have defaulted on the student loans, it's evident that these loans do not require credit checks.

Alternative Loans for Students with Bad Credit

Federal Parent PLUS Loans: Direct PLUS loans and FFEL PLUS loans are provided to parents/guardians on the basis of their credit history. Hence, students with adverse credit history can benefit from these student loans provided the parents/guardians are able and willing to procure federal student loans on their behalf.

FFEL and Direct PLUS Consolidation Loans: Parents and guardians can obtain FFEL and Direct PLUS Consolidation Loans for consolidating student loans. The former disqualifies parents with adverse credit history while the latter can be obtained by parents without undergoing any credit checks.

Special College Loans for Students with Bad Credit

Students, pursuing degrees that would help them work as nurses and teachers, are eligible for special low-interest no credit check loans that are administered directly by the federal and state government. Similar disbursement programs exist for medical and law students. The availability of the loan may be contingent to the student agreeing to serve in designated under-served areas for a certain period of time.

Defaulting on student loans can result in the government garnishing 15% of a student's disposable income as penalty. A portion of social security retirement benefits and disability benefits can also be withheld in lieu of repayment of student loans for students with bad credit. Students should ensure that they borrow keeping in mind their financial limitations since student loan defaults can disqualify a person from availing other loans in the days to come, not to mention the negative impact on credit scores.