Student Loans with No Credit History

Student loans are necessary in order to help students achieve their academic goals. Many students may not have a credit history since they may have recently finished high school and not have given much thought to building their credit history. Again, some students may have discontinued their education after high school. Such students may have a credit history but their credit score and credit history may be unsatisfactory.

Student Loans with No Credit History

A student is not expected to have a credit history to avail the following loans.

Federal Stafford Loans: Stafford loans can be either subsidized or unsubsidized. They are administered as Federal Family Education Loans (FFELs) or Direct Loans. Schools can participate in both FFEL program and Direct Loan program. Subsidized loans are meant for students, who demonstrate the need for low interest loans, as determined by federal regulations. One does not have to pay interest provided one attends school at least 50 percent of the time. In addition to this, the student does not have to pay interest on the loans during the grace and deferment period. Stafford Direct loans are obtained from the Federal government, while Stafford FFELs are provided by private lenders participating in the FFELs program.

Federal Perkins Loans: Perkins loans are low interest loans offered to deserving students based on their financial situation. These loans are meant for students who are unable to pay interest on Stafford loans. The loans are provided by schools, participating in the Federal Perkins Loans program, in order to promote the cause of post secondary education.

Consolidation Loans: Subsidized/unsubsidized - FFEL and Direct Stafford Loans, Federal Perkins Loans, Federal Nursing Loans, Health Education Assistance Loans and SLS loans can be consolidated. Consolidation is the process of replacing many loans with a single loan that carries a low-fixed rate of interest as compared to the individual loans. The purpose of consolidation is to ensure that students, who are finding it difficult to manage interest payments on various loans, have the opportunity to pay off these loans with the help of a loan carrying a low-fixed rate of interest. Previously, consolidation loans were available to borrowers who were in school 50 percent of the time in order to help in the early discharge of their Stafford loans (FFEL or Direct Loan). However, this facility is no longer available. Private education loans cannot be consolidated using federal consolidation loans.

FFEL PLUS Consolidation Loans: Parents and guardians, interested in financing their children’s education, can obtain a FFEL PLUS Consolidation Loan without any credit checks. Direct PLUS Consolidation Loans, on the other hand, disqualify parents with adverse credit history.

Student Loans Requiring Credit Checks

PLUS Loans for Graduates and Professional Degree Students: Students enrolled in graduate or professional degree programs can finance any additional expenses, associated with the cost of attending college, through the FFEL and Direct Loan Program. The terms and conditions of these loans are similar to the terms and conditions of Parent PLUS loans. The student should not have an adverse credit history and should have applied for the maximum eligible annual loan, under the Federal Subsidized and Unsubsidized Stafford Loan Program, before applying for a Graduate/Professional PLUS loan.

Federal Parent PLUS Loans: Direct PLUS loans and FFEL PLUS loans are provided to parents and guardians who want to help their children through school. These loans are provided on the basis of the parent’s or the guardian’s credit history. However, in case of these loans, the parent’s/guardian’s credit score does not matter as long as they do not have an adverse credit history.

Private Student Loans: In order to avail a private student loan, a student needs to have a good credit score and credit history. In case of private student loans credit worthiness, debt to income ratio and future earning potential are important factors that are taken into account before granting the loan.

There are a number of avenues for obtaining student loans with no credit history. It is up to the student to choose wisely, while borrowing the necessary amount, keeping in mind that defaulting on student loans can have serious repercussions.