How Available Are Student Loans With Bad Credit?
Getting student loans, or any type of loan for that matter, with bad credit is very difficult. Your credit history basically tells lenders what they are getting themselves into, and it gives them all the reasons why they shouldn’t afford you credit. Most times, however, pressing financial needs make it necessary to get loans with bad credit. Students are especially in a peculiar position seeing as the need to finance education is something that cannot be avoided. The federal government provides scholarships, loans, and grants that are used by a majority of students to go through their education. However, these funds are never enough to satisfy the need for education, and students have to look for additional funding instruments to satisfy their needs. Education loans for bad credit are a gap that can only be truly filled with government funding or through applying for a loan with a cosigner.
Private loan providers usually fill that gap, albeit at a higher interest rate. Federal loans for undergrads rarely ever go beyond 6%, while private lenders rarely, if ever go below 10%. The situation is even worse for students looking for loans with a bad credit history and no cosigner. The question would therefore be, are poor credit student loans possible? Are they advised for students who really have no other last resort?
Private Student Loans for Bad Credit; Good Idea or Not?
Applying for private student loans with bad credit is a daunting, yet not impossible task. Unlike the working majorities who may have a steady paycheck, students don’t have a regular income and having no one to cosign their loans makes the situation even more terrible. Student loans for bad credit with no cosigner are available at very high interest rates, some as much as 30%. Imagine undertaking a 4-year course with a borrowed principal amount of 30,000 dollars, with a 30% interest. The first option for any student with poor credit is to exhaust all federal funding available. Stafford loans, Perkin Loans, and PLUS loans are all available for students with bad credit history, and these should be exhausted first before thinking of moving toward private providers.
High interest student loans for bad credit do exist, and there are online providers and other banks who specialize in providing such facilities. In most cases, you will need to provide a cosigner who has a good credit history, and who is willing to put their credit rating in jeopardy in case you default on payment. The best thing would be to take advantage of the fed loans that do exist and exhaust these first. There are need-based loans which consider how much financial aid that you need and award you accordingly.
You might wonder how a student with no credit history even racks up a bad credit file. If you had a previous loan which you have previously deferred on or if you have managed to rack up unpaid credit card charges, all this will ultimately reflect on your credit history, and affect your credit rating. The most straightforward answer to how to get approved for student loans with bad credit is to seek federal funding first. Banks and other lenders will look at your FICO, and unless you can find a very flexible lender who is willing to overlook what your file says, you’re probably better of exhausting all your government and school funding.
The high interests levied on these student loans compound the problem further and make student debt insurmountable.
Do Private Lenders for Bad Credit Personal Loans Exist?
Many students make the grave mistake of using credit cards to pay for their education. While certain products on the market carry educational subsidies and are charged less taxes, students more often than not tend to splurge when they use credit cards. Racking up card charges and accruing interest can be terrible in the long run and may end up affecting your credit score even more. Is it possible to get student loans with bad credit? There are shylocks and other lenders who will charge you an arm and a leg in order to advance a loan. These will jump at the first opportunity to pounce on whatever substance of value you can offer as collateral, and some are not even regulated. Getting a loan from these is ill-advised and may end up losing you more money than you anticipated.
If you are running several loans that are affecting your FICO rating, the best thing would be to consolidate those loans into one and seek debt refinancing. Never rule out close family and friends when seeking education financing. Applying for school loans with bad credit isn’t an impossibility. But the likelihood is that you’ll need to do it with a cosigner who has a good and reputable credit history. The government always assumes that your parents have something saved for college, and its part is just to top up that gap. Basically, if your parents have incomes over 60,000 $ a year, it’s assumed they can create an educational plan for you, with the government topping up the balance. If this isn’t the case, you are always free to apply for need-based help.
Are There Banks That Offer Student Loans With Bad Credit?
It isn’t easy to get loans with bad credit, especially without a cosigner. Jobs aren’t guaranteed, and lenders need their money. Student loans with poor credit aren’t an impossibility, but they are a rarity if you don’t have a cosigner with a solid credit history. Federal loans are easy student loans to get approved for because you don’t need any credit history to apply for them and getting them is as easy as filling out the FAFSA online.