There Are Student Loans for People with Bad Credit
Francine L. HuffLoanBiz Columnist
With more teens
racking up credit-card debt these days, there is a strong possibility that some
of them will enter college with bad credit. Likewise, many older students who
plan to continue their studies and people who've been in the work force for
some time can find themselves saddled with loads of debt and a poor credit
rating. Having bad credit doesn't have to keep students from finding loans to
continue their education. They just need to know where to look.
Student Debt Grows
Graduate students carried an average outstanding credit-card
balance of $8,612 in 2006, 10% higher than in 2003, according to a study by
Nellie Mae. The average balance for college freshmen is $1,500 and students can
expect that balance to more than double by their senior year. As the cost of a
higher education continues to rise, many students will need to rely upon student
loans while juggling their other debt obligations.
Government Student
Loans
The best bet for people with bad credit is to apply for federal
student loans. Subsidized Stafford Loans are awarded to people who demonstrate
economic need. No credit check is required, so bad credit won't preclude loan
approval. Another advantage is that the government pays the interest while the
student is in school.
Families with bad credit but high incomes won't qualify for
a need-based student loan. But even if a student doesn't show an economic need,
he or she can still apply for an unsubsidized Stafford loan. Students can apply
for a Stafford directly from the Department of Education or through another
lender.
A credit check isn't required for the Perkins Loan program. Students
who demonstrate an economic need may qualify for these subsidized loans.
Perkins student loan amounts are determined by the school's financial aid
office, and generally range from $1,000 to $4,000 per year.
Other Loan Programs
Student loans may also be available to people with bad
credit who are studying for certain professions. They include the:
- Nursing Student Loan program that offers up to $4,000 a year
- Loans for Disadvantaged Students program for socially and financially disadvantaged people who are studying to earn health sciences degrees
- Primary
Care Loan program for people studying for medical degrees that focus on
primary care.
People with bad credit shouldn't give up on obtaining student
loans to continue their education. To supplement any loans received they should
also apply for as many grants and scholarships for which they can qualify.
Sources
Nellie
Mae
CollegeScholarships.org
FinAid
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
