Getting a student loan with bad credit is not as hard as it may seem, since many government funded loans are not based on credit score. In the United States, federal student loans are based on financial need rather than credit. For those who do not meet the government loan requirements, certain loan institutions may offer bad credit loans to students who have a co-signor, or they may charge very high interest rates.
The best, and oftentimes the easiest, way to get a student loan with bad credit is to fill out and return any necessary financial aid paperwork to the proper school officials. Students may have to specify that they are looking for student loans in additional to federal grants and other programs. This will allow all papers to be filed at once, and students with financial need are generally granted loans up to a certain amount. The exact amount will vary based on the student and is generally dependent on income earned, class schedule, and the type of school being attended.
Students who are going to school full-time or who are attending a four-year college rather than a two-year school may be eligible for more money per semester or academic year. Money is usually automatically credited to the student's school account, where it is used to cover tuition and book costs. Any funds leftover are sent to each student in the form of a refund check.
Those who do not meet the income requirements for a federal student loan with bad credit may have to find a consignor to help them get funds. A cosigner is someone who signs the loan contract along with the student and who accepts financial responsibility for payment of the loan if the primary signor doesn't follow through. The consignor's income and credit score are also taken into consideration, as well as his or her debt to income ratio.
Occasionally one may be able to get a student loan with bad credit without the use of a consignor through loan companies who specialize in bad credit loans. Certain stipulations may apply. For one, students may need to provide collateral, or an owned property which has a value of equal or greater value than the loan amount. This would allow the loan company to take possession of this property in the event of no payment.
