Have you been thinking about continuing your education? If so, you will likely need to secure student loans in order to pay for your tuition costs. If you have bad credit, you are probably wondering if it will be possible to obtain the money you need to obtain your degree.
Fortunately, there are a few options available for students with bad credit. One of the most common options is a federal guaranteed loan. Several prominent lenders offer subsidized and unsubsized loans to students regardless of their credit history. Keep in mind that there are federally established yearly limits for these loans – a student can borrow a maximum of $18,500 per school year. There are also lifetime limits that are determined by the federal government each year.
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These loans are available to most students, with a few exceptions. For example, if you have defaulted on a student loan in the past, you will not likely be able to borrow money through federal guaranteed loan programs. Avoiding default is very important, because you will want to be eligible to borrow money if you decide to continue your education in the future.
Although federal guaranteed student loans will cover tuition expenses for many borrowers, some people will find that they need to borrow amounts above the federal yearly limits. If this is the case for you, you may want to consider a private loan. If you have bad credit, you may not be able to qualify for a private loan by yourself; however, you can use a co-signer to obtain the extra funds you need. Typically, the co-signer is a parent or a family member. Be careful with this strategy, though, because defaulting on a private loan will not only affect your credit; it will affect the co-borrower’s credit as well.
Your parents may also be able to obtain a PLUS loan so you can continue your education. In most cases, your name will not be on the loan; instead, it will be the sole responsibility of the borrower. If your parents are willing to take on this debt, it can be a good way for you to get the funds you need without worrying about your credit score.
Finding a bad credit private student loan is a lot more difficult. These lenders won’t be backed by the government, so credit will be part of the approval process.