Private and Federal Student Loans for People with Bad Credit

It’s harder for people with bad credit to get student loans, but it certainly isn’t impossible. Provided that you haven’t defaulted on a college loan previously, you may be eligible for a Stafford or Perkins loan from the federal government. If you have a willing cosigner, you should be able to get a private student loan for bad credit from a bank. The problem a lot of people have in terms of getting credit approval is that they don’t have a credit history because they’ve never had reason to borrow money before.

Getting Approval for Student Loans for People with Bad Credit

If you have adverse credit or no credit history, you’re likely to find it difficult to get a private student loan with bad credit. Banks need to be able to assess your creditworthiness so they need some data to work with. If you haven’t borrowed money before, they can’t make an informed decision and will reject your application. Don’t despair as this problem can be addressed provided that you act quickly.

If you don’t have a credit history, it’s advisable to get an instant decision credit card at least six months prior to applying for college financing. As long you settle your balance within the designated grace period, the issuer will report this to credit reference agencies. This will vastly increase your chances of getting acceptance as you will have a better credit score than was previously the case.


If you have a willing cosigner, students loans for those with bad credit is less of an issue, but they do carry a risk for the person who has helped you. If you default on the agreement, the cosigner becomes responsible for the outstanding balance. Given the fact that this person is likely to be a close friend of family member, you should think carefully before involving a third party.

Federal Stafford School Loans for People with Bad Credit Scores

Federal student loans for people with bad credit are available without credit checks as part of the Department of Education’s Federal Direct Lending Program (FDLP). The government doesn’t want people to be excluded from a higher education purely because they lack the financial resources or don’t qualify for funding due to a history of poor credit. You will qualify for a federal Stafford student loan at 6.8%.

If you pass the means test, you may qualify for a subsidized Stafford bad credit student loan from just 4.5%. A further benefit, other than the low rate of APR, is that you won’t be charged any interest before you need to repay the money you owe. This is also the case if you needed to defer the loan because you’re unable to find work or financial difficulties. The standard repayment term is set at ten years.

Regardless of whether you pass the means test, all undergraduates will qualify for an unsubsidized Stafford loan. The only time you won’t be eligible for a Stafford loan is if you’ve previously defaulted on a college loan. Borrowing limits are determined by status so, subject to certain limits, independent students should be able to borrow significantly more than those who continue to live with their family.

Federal Perkins Student Loans for Those with Bad Credit

Only those who are in the greatest financial need will meet the eligibility criteria for a Perkins federal student loan. Unlike a Stafford bad credit loan, it is made through the school’s financial aid office. It is a subsidized loan with rates starting from just 5%. You will either receive the money by check or it can be paid directly to cover your school fees before the start of the academic year.

You won’t need to pay interest on your Perkins loan until after graduation or during any period of deferment. A further benefit of both Perkins and Stafford student loans for people with bad credit is that you may be eligible for student loan forgiveness. This could be the case of you entering certain professions, such as nursing or teaching, where there is a benefit to the wider community.