Here at the end of July there are many college students who may have completed their scholarship and grant applications or research only to find that they are still in need of financial aid, but there are some specific students who are in a bad credit position who are now facing the potential need for student loans and wonder whether this will be an option. Obviously, there are students who are in a position where they either may have a poor credit score or no credit whatsoever, but in cases where low credit is a problem, it has been stated in the past that there are federal financial assistance options that may be helpful to students seeking loans, but also some officials want students to remember that there are parent loans that can help meet college costs as well.
However, when it comes to borrowing for one’s education it needs to be understood that acquiring debt for college tuition is not optimal, despite the fact that there are some who feel that this particular type of debt is “good debt” because it is helping a student further their education and knowledge in the hopes of finding employment opportunities that will allow them the financial means to repay what they owe. Federal loans for bad credit borrowers are usually the route that students will take because these forms of borrowing opportunities do not take into account a student’s financial position necessarily, but will rather look at a student’s financial need and what class rank they happen to hold.
When it comes to parent loans though, students who are in a position where there parents or guardians may be able to borrow money are also able to not only consult private student loan options but federal parent loans as well. There are some cases where parents may be able to either borrow or cosign on a private loan or acquire a federal loan, but when it comes to borrowing in this capacity to meet college costs it is again an option that should only be used as a last resort.
Breaking down the types of loans, federal versus private, has been a debated issue as there are some financial aid counselors who feel private loans should be used only as a final option but some private lenders are offering parents who cosign a student loan the opportunity to have their responsibility discharged after a set number of on-time repayments are made. Yet again, when it comes to interest rates, repayment options, or even whether a loan should be used in a particular situation, this will depend on the parent or student borrower’s situation.
However, when borrowing either a private loan, federal loan, or using a parent loan to make tuition payment easier for a student in a bad credit position, it needs to be understood as well that borrowers who may have bad credit as a result of poor financial practices, typically seen in nontraditional students who are either beginning or returning to college well after they graduated high school, need to make sure that they do not have other debt obligations that will weigh down or hinder their ability to repay this particular type of student loan debt as federal loans, or in some cases private loans, that offer bad credit borrowers the option of paying college costs can be incredibly problematic if they are used when other debt obligations are in place.