Bad credit student private loan

Bad Credit Student Private 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 private loans with excellent interest rates is easier if you have a sterling credit rating, bad credit student private 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 private loans are if you have defaulted on a federally granted student private loan in the past.

Bad credit student private 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 private 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 private 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 private 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 private 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 private loan is at a very high interest rate, all is not lost. Many student private 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 private loan at a better rate, lowering your payments to a more affordable level.

Copyright (c) 2005 Mark Kessler