Bad credit student loans are easy to find if you know where to
look. Whether you are an adult eager to pursue higher education or a caring parent who wants the best for their child, don’t let bad credit stop you from getting the student loans that you need. As the economic crisis looms over the heads of millions of Americans, issues such as debt and bad credit dissuade some from seeking the financial aid they need for college, fearing that they will be turned down. However, there is hope! Don’t let a mortgage, auto loan, credit cards, or bankruptcy stop you from seeking a student loan. It is definitely possible to obtain a student loan, even with bad credit. You just have to know where to look.
A key element to understanding the financial aid process is to recognize that college is a business. Despite well-intentioned goals and mission statements from colleges that highlight the value of education, the bottom line is always money. In order for any college to remain in business, whether it is a community college or an ivy-league university, the seats in its classrooms must be filled. Of course, many students cannot afford to pay for college out of pocket, so they obtain
student loans. Either way, the school receives its money and the student gets his or her education.
Even Harvard University, an ivy-league school, recognized the need to extend more financial aid to families with low incomes. More financial assistance means more students attending and more revenue. Unfortunately, bad credit prevents many students from obtaining financial assistance via private student loans or personal loans. The good news is that the federal government offers federal student loans to students based on economic need and not their credit report. Bad credit no longer poses an issue when trying to obtain a federal student loan.
In fact, most students who attend college pay for their education expenses at least partially with federal financial aid. Want even more good news? Because federal loan qualifications are based on need, low-income students can attend colleges and universities that they previously believed they could not afford. How? The federal loan will make up the difference between what you can afford and the actual cost of attending the college, no matter what college you choose.
Student Loans for Bad Credit Individuals Are Available
With the latest government laws passed in March of 2010, both
student loans and Pell Grants amounts were increased. There are
also more opportunities since several of the new rules and
regulations allow student loans for bad credit individuals since
they are soley based on the financial need and not credit history.
The FAFSA (Free application for Federal Student Aid) does not even
reference any credit information.
Now that you know financial assistance is possible, the next step in the financial aid process is to apply.
The first step is to fill out the Free Application for Federal Student Aid or FAFSA. This application will calculate your financial need to determine how much aid you are eligible for and what the government thinks you can pay yourself. Your income and dependency status are evaluated, not your credit rating. The application asks for such items as the income reported on tax statements, the number of people in the household, and other general questions. The bottom line is, if you need financial aid, you will get it. You can complete the application online at www.fafsa.ed.gov.
Federal assistance comes in several forms. After completing the FAFSA, many applicants are offered a Federal Stafford Loan. This has to be repaid and both undergraduate and graduate students can qualify. This loan can be subsidized which means the government foots the bill on any interest accrued. However, if the loan is unsubsidized, the borrower is responsible for the interest on the loan.
Another option is the Federal PLUS Loan which parents can obtain if they have a dependent undergraduate student. Financial need is not so much a requirement for this loan, but the borrower definitely has to pay the interest. Finally, there is the Federal Perkins Loan. This is a low-interest loan that maxes out at $4,000 for undergraduates and $6,000 for graduate students annually.
So whether you choose the Federal Stafford Loan, the Federal PLUS Loan, the Federal Perkins Loan, or a combination, you will have the money you need if you truly want to go to school. Remember though, these are actual loans, therefore repayment is mandatory. The last thing you want is to default on repayment and make your credit worse than it already is. Fortunately, federal loans are deferred until after graduation or once the student ceases to attend school for a significant period of time.
Really, what’s the catch? you might ask. When you have bad credit, there always seems to be a catch and receiving a federal student loan is no different. Unfortunately, when you are offered a federal student loan, you may not have much flexibility (if any at all) in choosing interest rates or repayment terms. You can either take the loan or leave it. If this bothers you, accepting the federal student loan may not be your best move. Additionally, lots of debt can be accumulated over the course of one’s college career as loans are taken out semester after semester. If you are already struggling to make ends meet and don’t foresee much of a change in your income in the upcoming years, you want to be wary about how much money you borrow. If obtaining a federal student loan is not for you, perhaps seeking out grants and scholarships is a better option.
Don’t let your poor credit or bad credit keep you from your aspirations of higher education—you can find the financial help you need to get your education. Getting a student loan is possible and there’s no credit check involved. Get your loan, get your degree, and stop worrying about paying for college. If only buying a car with bad credit was this easy…
