How To Get Student Loans With Bad Credit: Guide & Tips

Don’t let your bad credit stop you from following your dreams! Read this guide and learn tips on how to get students loans with bad credit now!

Typically, your ability to get a loan or a credit card is reliant on your credit score. This score, determined by FICO and crediting agencies, is your ticket in. The average credit score among Americans is 687, so if you have a score at or above that, you’re in pretty decent shape.

When it comes to getting student loans though, none of this matters. Currently, 40 million Americans have student loans, and 70% of bachelor’s degree recipients graduate with student loan debt.

Clearly, not all of this people had above-average credit, and yet they were still able to get student loans. You can follow suit.

Below, we’ll show you how to get student loans with bad credit.

How To Get Student Loans With Bad Credit

When it comes to student loans, there are two routes you can take, separately or simultaneously: the private route, and the public route.

The private route can be incredibly difficult to traverse, while the public route is a piece of cake.

But nevertheless, we’ll take you through both options.

The Private Route

Obtaining a loan from a private institution, like any bank, always requires that you have good credit. This is an issue for most college-aged students because their credit is either nonexistent or poor.

This is often the case because one of FICO’s biggest determinants when giving you a credit score is credit history. At 18 years old, you likely haven’t had very much credit history at all. In order to show that you’re responsible enough to be loaned money, you have to have a track record of responsibility, to begin with. It’s a bit of a catch-22.

If you’re 18 and you do have a credit card, the account is likely too young to give you a good credit score. Either that or you’ve been bad at paying off your balances. Let’s face it: High schoolers are not the most responsible demographic.

All that said, there is still something you can do.

Get a Cosigner

This is really how to get student loans with bad credit in the private sector. Much like a car lease or an apartment rental application, getting a cosigner can turn that “no” to a “yes” on your student loan application.

In order for this to work, though, your cosigner should have a long, strong credit history with, ideally, a credit score well above 700. This cosigner is ultimately responsible for the debt owed to the bank if you become unable to pay it.

The best place to start looking cosigner is your family. Ask your mom or dad for help on this issues, and they’ll likely oblige. If they’re good at managing your family’s finances, they should be in good shape credit-wise.

Getting a cosigner is typically the only way most private lenders will give out student loans.

There are some banks that will hand out student loans to people with bad credit, but these lenders are typically predatory, tucking obscene hidden interest rates into their loan offers. You should avoid them at all costs.

The Public Route

If you don’t know how to get student loans with bad credit, your first and best option should be to hit up Uncle Sam for some cash. The federal government gives out student loans to anyone, regardless of their credit scores.

Most of the time, they don’t even run a credit check at all. The other benefit is that the government is less profit-concerned so their interest rates are less steep and more friendly to college students.

There are also several different types of loans you can apply for through the government’s free application process.

Direct Subsidized Loans

These government loans, sometimes called Stafford loans, are fixed-rate loans. Depending on your year in school, you can borrow up to 3,500, 4,500, or 5,500 dollars each year.

The biggest benefit to these loans is that, if you defer payment on them while you’re in school, the government will eat the cost of the interest rates. The interest rate also isn’t very high to begin with, at just 3.76%.

Direct Unsubsidized Loans

Every potential student qualifies for these loans regardless of financial need or your parents’ income. The only qualification is that you are a dependent student, meaning you’re under 24 years old, aren’t married, and aren’t a veteran.

Depending on your year in school, you can borrow up to 5,500-7,500 dollars each year. The only difference between these loans and subsidized loans is that you’re responsible for the paying the interest. The government won’t help you out there.

Perkins Loans

This type of loan is only for those with dire financial needs. Also, these loans are funded primarily by participating colleges, not the federal government. So, you’ll want to check with your school’s financial aid office.

If your school does participate in this program, you can borrow up to 5,500 dollars per year regardless of your year in school. The interest rates on these loans are also a little higher at 5%.

Direct PLUS Loans

These loans are for either graduate students or parents who want to borrow money to pay off their children’s tuition. These loans have the highest interest rates of all among federal loans at 6.31%.

Because of this, it would be worth seeking out your private options to see if you can get a better offer. If you have nonexistent credit, though, this is a good option to turn to.

The Bottom Line

The general wisdom is that you should first apply for all of the available federal student loans you can. Only then should you turn to private institutions.

Of course, the reality is that you’re probably going to a need a loan cocktail with many ingredients to pay your college tuition. The cost of tuition is skyrocketing. A meager $5,500 loan may not even put a dent in the cost of your college education.

This is especially true if you’re going out of state or to a private Ivy League college. But fear not, you’ll be able to find some financial aid in some capacity.

Hopefully, this post gave you some ideas on how to get student loans with bad credit. If you need any more financial advice, be sure to check out the finance section of our site.