Student Loans for Bad Credit Borrowers

The most common misconception about student loans is that you cannot acquire a student loan without good credit. Federal student loans do not look at your credit and your credit score ultimately has no bearing on whether you qualify or not! So, before you assume you don’t qualify, apply with FAFSA, you literally have nothing to lose. The second misconception is that student loans never accrue interest while you are in school. If you have an unsubsidized student loan this is not actually true!

Can You Get Approved for a Student Loan without a Cosigner?

It is possible that you can get approved for a student loan without a cosigner, although using a co-signer will definitely help your chances in qualifying. Some lenders allow borrowers to release the cosigner from the student loan agreement after a period of on time payments. Some student loan lenders may be open to using collateral (although this should usually be avoided if possible) in order to help you qualify. Some lenders also offer an ISA (income share agreement) as an alternative to repay the loan in which the qualification requirements will be somewhat different. Besides credit history, lenders will look at your employment history, debt to income ratio, the length of time at your current residence, any professional licensing you may have, bill repayment for utilities and cell phone bills, how often you change cell phone numbers, etc. So, yes, you absolutely can get approved without a cosigner.

Additional Borrowing

It's important to stress that you borrow only what you need to fill the gap that was not covered by the federal student loans. Whenever you ask yourself if you should consider borrowing, you should not do so in excess of what you need. It’ll typically only make things more difficult in the long run and could end up costing you thousands and thousands in extra interest payments. As consumers it’s our job to avoid interest payments whenever possible since they are essentially just throwing money down the drain.

Things You Should Be Aware of

Borrowers should be aware of any cash back or rewards from making timely payments. Some lenders offer bonuses for automatic payments (reduced interest payments) and some will be more lenient with deferment and forbearance. Make sure you are getting a fixed rate loan and not a variable APR. Make sure you know when the first payment is due (you will ideally want it to be after you graduate). Finally, you don’t need to only go to one lender if you are offered favorable terms by different lenders. Although, it will certainly make your life a lot easier if you have everything with the same loan provider, in the long-term things might not work out that way simply due to when you originate the student loans. It’s possible you get better terms and become more credit worthy as you progress through school so always keep that in mind. Your terms could actually end up getting better and you could qualify for more scholarships down the line, requiring you to take out less loans. Otherwise these are a majority of the steps you’ll want to take besides just filling out forms and applications.

You’ll need to do a good amount of research but you can qualify for student loans without a co-signer, even if you don’t have the best credit right now.