With the mounting bills and debts of a student on a limited income, it might seem impossible to continue pursuing your education. Many attending school struggle with bad credit and wonder if it is possible to qualify for additional student loans with less than stellar credit. The trend these days is for people to return to school to advance their careers and seek greater opportunities. But what if your credit wasn’t great to start with?

Yes, you can get some forms of student loans with your bad credit, though you are not eligible for every kind of loan. Your best bet would be federal student loans. You can obtain a federal student loan with or without credit history. With a credit score between 300 and 629, you are eligible for:

  • Federal loans
  • Private loans from lenders that do not require credit or co-signer
  • Private loan backed by co-signer possessing a good credit.

Federal Direct Student Loan

Federal loans do not depend on the borrower’s credit history, but there are some limits on how much money one can borrow under the terms of a federal loan.

To apply for federal loan as a student, you need to fill the Free Application for Federal Student Aid (FAFSA). This will allow you to learn which loans are eligible for your program.

Federal loans are either subsidized or unsubsidized. For subsidized loans, the interests are paid by the government on behalf of the student within the loan period. This is available only to students with proven financial need. For unsubsidized loan, the interests accumulate over the borrowing period to be repaid after graduation.

Federal loan repayment periods generally span 10-25 years with amounts up to $31,000 for undergraduates with parental assistance and $57,500 for undergraduates flying solo.

You are better off with federal direct loans not just because the process overlooks bad credit, but also because federal loans allow for generous flexibility in loan repayment with low fixed interest rates.

Private student loans

There are some good private student loan options available for students with bad credit but we highly encourage you to research the terms of repayment. Certain loan programs as Ascent and mPower may have especially generous repayment terms for those in the health care field.

Most private loans a have average limits between $75,000 and $120,000. Since some of them rely on credit history to award loans to students, you may need to obtain the consent of a qualified co-signer.  A co-signer is a person who doesn’t necessarily receive the proceeds of the loan, but agrees to be responsible for the repayment of the loan even when they receive no benefit from the loan itself.

Also, be wary of the total amount you borrow in student loans. We have seen many people come through our doors who owe more in student loans than they do on their house!

Alternative student funding schemes

To make up for the inadequacy of the federal and private loans, a student can supplement his or her financial aid package with scholarships and work-study programs or borrowing from friends and family.

There are other alternative financial aid programs which are more specific to a student’s field of study. Many schools and alumni choose to fund scholarships or student loan forgiveness programs in those fields which are hurting for skilled workers.

The Loans for Disadvantaged Students, Health Professions Student Loans and Primary Care Loans are examples of programs aimed at assisting indigent students going into the health care field. Other programs exist for educators and those going into public sector jobs.

Having bad credit should not deter you from continuing your studies; you can find a way around your bad credit and still obtain your education, but we encourage you to avoid high interest rates associated with private education loans. You may need to change your spending pattern, learn how to legally improve your credit score or change the focus of your educational field to qualify for more attractive student loans. Some careful planning now will benefit you in the future.


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