Bad credit student loans are available to individuals who are seeking a way to afford the costs of college but may be in a situation where their financial history is either poor or nonexistent. While there are various types of student loans that can be made available to bad credit borrowers, some may be more beneficial than others depending on one’s bad credit situation.
Student loans are usually grouped into either a private student loan category or federal student loan category. Private student loans act similarly to personal student loans and the interest rate, or even the ability to qualify for these loans, can be dependent upon one’s credit score and history. Often times, a private student loan will require a cosigner if a college student has little or no credit history, or if they have a bad credit score. While some of these private student loans can be affordable, they may come with a higher interest rate due to the fact that the borrower’s credit history and score are considered.
Yet, federal student loans are also available to almost any college student and do not take one’s credit score into account. Federal student loans most often granted to students who are out of high school, so factoring one’s credit score into the equation when lending would result in many prospective students being denied a college loan or given a college loan with a high interest rate. There are types of federal student loans available to parents which may act more like private student loans, but bad credit borrowers can fill out a FAFSA form and potentially gain access to student loan aid for college tuition costs.
However, many financial aid counselors advise against borrowing student loans if an individual’s bad credit score is the result of poor financial habits or other sources of unpaid debt. Scholarships and financial aid opportunities are available and can help almost anyone afford the costs of attending a college or university. Oftentimes, a bad credit borrower may benefit more from seeking scholarships and grants first so that they can either avoid borrowing student loans or reduce the total amount of their student loan debt if loans are necessary.