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Top Companies That Offer Bad Credit Student Loans

The cost of education has taken a big leap with tuition fees adding up every year. It has become more difficult for many individuals to keep up with the cost of tuition, accommodation, and other academic expenses. That is why most of them look to student loans for a line of support.

Student loans are relatively easy to get if you have a good credit score. But if your credit score is anything below 630 then you will have a hard time getting approved.

Bad credit student loans are not common due to the fact that most lenders would prefer to give loans to individuals with good credit scores.

A student loan is an unsecured loan (a loan that does not require collateral) which means that lenders would have to rely on your promise to pay back the loan. To lenders, a good credit score means you are more likely to pay back the loan while a bad credit score sends wrong signals.

Fortunately, there are a number of companies that give bad credit student loans. The main problem with applying for loans with bad credit is the high-interest rates that will be attached to these loans. This makes it harder to pay back and definitely easier to default on payment.

When you default on a payment, your credit score plunges and you will have a really hard time getting loans in the future.

In this article, we are going to list several companies that offer bad credit student loans.

1. Federal Direct Student Loan

Most individuals with bad credit would look to the government for student loans. This is because when offering student loans, your credit history wouldn’t be taken into account.

Unlike with private lenders having a bad credit score wouldn’t increase the interest rates attached to your loan. Instead, you will be given low-interest rates and flexible repayment options.

To qualify for the loan, you need to be a citizen of the U.S. However, non-citizens can also qualify if they are able to meet other eligibility requirements. Its other eligibility requirements vary and are based on the type of financial aid you go for.

Loan amounts also vary and depend on the financial need of the student. For students who receive financial support from their parents, the maximum loan is about $31,000 throughout college.

Students who do not receive any form of financial help from their parents can apply for a loan amount up to $57,500. The loan period is between 10 to 25 years to allow for easy repayment. The loan period is based on the loan amount that is approved.

Federal Direct Student Loans are considered the best student loans because of the features they offer. These features make repayment easy even if the student is in college or just newly employed.

Repayment options include a payment postponement for up to 3 years if you are unemployed. For periods of deferment and subsidized loans while in college, there would be no interest added to the loan.

2. Ascent Independent Student Loan

Ascent Independent is a private lender that considers borrowers with bad credit. Although most individuals would qualify for federal student loans, they still find these loans insufficient to cater for their college needs. Thus, they turn to private lenders. The good news is that private lenders are ready to give up to $200,000 in loans to eligible applicants.

Eligibility requirements are:  

  • Must be a citizen of the United States or permanent resident
  • Must not have any reported bankruptcies within the past 5 years
  • No collections accounts over $100, no tax liens
  • No foreclosures by creditors
  • No unsatisfied repossessions
  • No delinquencies of more than 60 days in the previous two years.

If you have taken any previous government or private loans, you must not have defaulted in payment.

Loan terms start from 10 years up to 15 years, however, a 15-year term is only available for variable-rate loans. Repayment begins six months after the borrower has graduated from school. Ascent Independent also allows a grace period of 6 months which is just the same with Federal loans.

Ascent Independent provides borrowers up to 24 months of forbearance, however, you are not free from interest during this period as it will continue to accrue. This is one of the reasons why Federal student loans should be the first choice of any borrower when it comes to bad credit student loans.

3. MPower Student Loan

MPower provides bad credit student loans to juniors and graduate students. Borrowers can apply for a loan of $2,000 to $50,000 and repay the loan amount in a period of 10 years.

Repayment options with MPower are very flexible with interest-only payments being made by the borrower while in school and during the grace period (grace period is about 6 months). Full payment of the loan begins after leaving school and go on throughout the loan period.

The main problem most borrowers will face with this lender is the incredibly high interest rates. Interest range from 7.99% to 13.99%, however, it offers interest rate discounts of 1.5% for eligible applicants.

4. FundingU

FundingU is another option to consider. FundingU has a loan option that is quite different from that of most lenders on our list. Instead of offering a single loan throughout the school period, it sets a maximum loan amount that a student can apply for per semester.

Interest rates start at 7.99% which is quite high. FundingU is selective of the type of students it offers its loans. To qualify, you must be pursuing a bachelor’s degree at a Title IV-eligible 4-year college. For-profit schools are not eligible to apply for their loans.

FundingU doesn’t look at your credit score when offering its loans rather it bases its decision on how the borrower is progressing in school and their earning potential. The better your grades are, the higher the chances of your loan application getting approved.

Conclusion

Bad credit student loans from the government are considered the best option to go for. However, most borrowers would require more than what the Federal loans can offer. This is why they look to students loans from private lenders.

Private loans tend to come with high interest rates especially for borrowers with bad credit. This is why they should be the last option.  

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