Bad Credit Student Loan - What To Do If You Need One
Are you
concerned that bad credit will prevent you from going to college? While it is
true that finding student loans with excellent interest rates is easier if you
have a sterling credit rating, bad credit student loan aid is possible. For
example, the most popular US Department of Education loan, the Stafford loan,
assumes that most applicants will be going to college straight from high school,
and will not have a credit rating yet. Therefore, Stafford loans do not even
consider the credit rating a factor when it comes to qualifications. The same
holds true for Perkins loans, which are federal loans designated for the
neediest students.The only reason bad credit would interfere with these kinds of
student loans are if you have defaulted on a federally granted student loan in
the past.
Bad credit student loans are also possible if your parents have better credit
than you do. In this case, a PLUS loan, which is granted to parents and not to
the student, might be the way to go. US Department of Education student loans
(like Stafford and Perkins loans) assume that the parents will pay for a certain
amount of their children's schooling; PLUS loans are intended to cover the
amount that the parent is obligated to contribute toward college costs.
Federal funding is a good choice for a bad credit student loan because they
are specifically designed to help make college more accessible; therefore, their
requirements are much looser than those of most banks and other lending
companies. However, if you are unable to secure a US Department of Education
student loan, you may need to turn to private loans. If you are planning to
graduate in a field with a high earnings potential, like law or medicine, you
might have a better chance of receiving a bad credit student loan from private
lenders.
None of these choices are either/or possibilities, by the way. You may be
able to put together enough money to finance college through a combination of
any or all of the above types of loans. Moreover, even if your bad credit
student loan is at a very high interest rate, all is not lost. Many student
loans defer payment until you have finished college, giving you time to improve
your credit rating. At that point, you might want to look into ways to
consolidate your student loan at a better rate, lowering your payments to a more
affordable level.
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