Individuals who need student loan aid in order to pay the costs of college tuition and fees may worry that a bad credit score might prevent them from borrowing. However, federal student loans have been providing financial aid assistance for college students for ages and this includes individuals who have a bad credit score.
Federal student loans typically do not consider a credit score or history into their equation when lending. Rather, this type of loan is capped to a certain amount depending upon the year that a student is entering in college. The higher a student is in class rank, usually, the more financial aid they can receive from student loans.
Changes in federal student loan lending will be advantageous for many schools and students as loans will come directly from the federal government and may be able to offer lower interest rates or a higher amount of student aid for those who qualify. Federal student loans also, along with affordable interest rates, have repayment options for those who may be struggling to handle their student debt after graduation.
While federal student loans can be beneficial for individuals in need of financial aid, it’s important to understand that any student who is seeking a college education should also look for as much financial aid from scholarships or grants as they can find. While federal student loans can be affordable, scholarships and grants are free money that does not create debt after graduation and can meet most or all of the costs of attending a college or university.
The college student’s first priority should be finding these forms of free financial aid before turning to college loans, as again, exiting a college or university with a minimal amount of student loan debt or, none at all, will be preferable.