Many individuals worry that a bad credit score will prevent them from obtaining a student loan which they may need in order to pay the cost of attending a college or university. There are many people who want to pursue a college education but did not enter a university or college directly out of high school and may have suffered a poor credit score as a result of financial decisions they made in life.
However, federal student loans are often available to individuals with a bad credit score due to the fact that they are provided from the government, have caps on the amount that individuals can borrow, and are usually given to individuals who are just out of high school or in college and who may not have much of a credit history anyway.
While federal student loans are not a guarantee when it comes to getting this type of financial aid, they can be easier to obtain than many private student loans and can come with a lower interest rate as well. New legislation is bringing about changes in student loans as of July 1 as the federal government will no longer make student loans through private lenders.
It’s estimated that by not paying private lenders to make federal student loans there will be savings of around $68 billion over the next decade. This change will not really affect students so much as it will how student loans are issued, but it may make more money available for these loans and other forms of financial aid.
Individuals with a bad credit score in need of college loans may want to contact their university financial aid department, fill out a FAFSA form, or simply consult the Department of Education’s website to find out more about obtaining student loans. While college loans from the federal government may be available for many, it will be in a student’s best interest to only borrow what they need and to get as much additional funding from scholarships and grants before turning to loans.