How Easy is It to Get a College Loan

The Bankrate guide to choosing the right student loan with bad or no credit

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When shopping for student loans you can use to pay for school, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of June 3, 2022. Check the lenders' websites for more current information. The top lenders listed below are selected based on factors such as student loan interest rates, loan amounts, fees, credit requirements and broad availability. To learn more about how we selected lenders, see our methodology section below.

Compare bad- or no-credit student loan rates in August 2022

LENDER	CURRENT APR RANGE	LOAN TERMS	MIN. LOAN AMOUNT	MAX. LOAN AMOUNT	BEST FOR
Federal student loans	4.99% to 7.54% fixed	Standard repayment is 10 years	None	$7,500 annually for dependent undergraduates, $12,500 annually for independent undergraduates and 100% total cost of attendance for graduate students	Overall student loans
Ascent	1.75% - 12.30% variable; 3.22% - 14.75% fixed (with autopay)	5 to 20 years	$2,001	$200,000	Academic Achievers
Funding U	7.49% to 12.99% fixed	10 years	$3,001	$20,000	Undergraduate borrowers

Best overall

Federal Student Loans

See offers

Check with studentaid.gov

Min. credit score:

None

Fixed APR From:

3.73% –6.28%

Loan amount:

$1,000–$500,000

Term lengths:

10 to 10 years

Min. annual income:

$0

Overview: Most federal student loans don't require a credit check, so these loans are easily the best option for students with poor credit or no credit history. Federal student loans also come with competitive interest rates, and you may choose from a variety of repayment options.

Why federal student loans are best overall: Federal student loans are available to every borrower, regardless of creditworthiness or financial health. Plus, each type of federal loan offers the same interest rate to all borrowers, so you'll know what your rate will be before applying.

Best for Academic Achievers

See offers

Check rate with Bankrate

Min. credit score:

Not disclosed

Fixed APR From:

3.22% –14.75%

Loan amount:

$3,000–$20,000

Term lengths:

5 to 20 years

Min. annual income:

$0

Overview:Among Ascent's student loan options is a unique non-co-signed student loan, which takes into account your school, program, graduation date and other factors. Ascent claims that these loans are based on your future income, so you may be able to qualify if you're in a high-earning field of study. Borrowers can also apply for undergraduate and graduate loans with a co-signer, which opens up lower rates.

Why Ascent is best for borrowers without a co-signer: Ascent is one of only a few lenders with a loan option that approves borrowers based on things like predicted future income and field of study rather than credit score, so a co-signer may not be needed.

Best for Undergraduate Borrowers

Funding U

See offers

Check rate with Bankrate

Min. credit score:

Not disclosed

Fixed APR From:

0%

Loan amount:

$3,000–$20,000

Term lengths:

0 to 0 years

Min. annual income:

$0

Overview: Funding U does not use credit scores to make lending decisions; instead, it considers borrowers' academic achievements, career path and GPA. This makes it a great option for borrowers who haven't had a chance to build up a credit history and who don't have a co-signer. While Funding U does limit loan amounts to $20,000 a year, it's worth considering for undergraduates who need extra funds after using up their federal loan allotment.

Why Funding U is best for undergraduate borrowers: Funding U lends only to undergraduate students, and it's one of the only lenders that accepts undergraduates without a co-signer. Even freshmen are eligible to apply; in this case, lending decisions will be made on high school academics.

The student loan alternatives for borrowers with bad credit

For some borrowers, the high interest rates and strict approval guidelines associated with bad-credit student loans may not be worth it. In this case, borrowers may choose to turn to income-share agreements.

Income-share agreements give you money for school, then accept a percentage of your income every month as payment. When you sign up for an income-share agreement, you'll be given a few specific terms: the percentage of your income that you'll owe, the minimum and maximum amount you'll be required to pay each month and the length of time that you'll need to make payments.

Income-share agreements can be beneficial for borrowers with bad credit, since many do not have strict credit score requirements like student loans do, and you won't be subject to high interest rates. However, keep in mind that your income-share agreement payments will change alongside your income. If you end up in a high-paying job, you may end up paying back more than what you borrowed through your ISA. Still, the risk could be worth it if you're having trouble getting approved for other types of funding.

Edly: Best income-share agreement for quick funding

Overview: Edly offers income-share agreements of up to $25,000, with payments starting four months after graduation or once you earn more than $30,000. Borrowers can benefit from a quick application and approval, as well as perks like deferred payments after a job loss. Edly's repayment period is 60 months, although borrowers can choose to pay off the loan early.

Why Edly is the best income-share agreement for quick funding: Edly advertises the fact that it has a quick application and approval process. According to the company, borrowers can check their terms within 30 seconds and complete the application within two minutes.

Pros:

• Three-minute application.
• Only 60 payments required.
• No minimum credit score.

Cons:

• Does not disclose payment structure.
• Relatively low loan maximum of $25,000.
• Few direct customer service options.

Eligibility & More: Edly doesn't disclose many of its eligibility requirements; it says only that it will check your school and major. While there are no minimum credit score requirements, Edly will also check for any adverse credit history. Borrowers with late payments or collections in their credit history may have a harder time being approved.

Stride: Best income-share agreement for career resources

Overview: Stride's income-share agreement payments start at 2 percent of your income, with that percentage increasing as you borrow more money. This means that if you earn $30,000 a year, you may pay as little as $50 a month. Borrowers will be required to make 60 payments, though these payments can stretch over 10 years.

Why Stride is the best income-share agreement for career resources: In addition to the basic perks of an income-share agreement, Stride goes a step further by providing career resources and perks to its members. These include networking events, skill workshops and exclusive discounts.

Pros:

• Robust online resources.
• Low minimum income share.
• Maximum repayment period of 10 years.

Cons:

• Does not disclose minimum income threshold.
• Relatively short grace period of three months after graduation.
• Funding limited to $25,000 per year.

Eligibility & More: Stride bases its lending decisions and rates on borrowers' "future earnings and success." It does not have a minimum credit score but may not approve borrowers who have an adverse credit history, such as a history of default or collections. Stride does not disclose other qualification requirements.

Can you get a student loan with bad credit?

It is possible to get a student loan even if you have bad credit or no credit history. That said, it will be more difficult to qualify, and rates will be higher. Federal student loans are the easiest to qualify for, since most won't do a credit check and don't consider your credit score, and interest rates are the same for all borrowers. If you need to borrow private loans, you can look for lenders that have low credit score requirements, take other eligibility requirements into account or let you add a co-signer to your loan.

Federal vs. private student loans

Borrowers with poor credit can choose between federal and private student loans. Federal student loans are offered by the U.S. Department of Education and set one fixed rate for all borrowers. They also don't have a minimum credit score requirement, so they're the first place to turn if you have a spotty credit history.

Private student loans are offered by banks, credit unions and online lenders. Unlike some federal student loans, they often allow you to borrow up to the total cost of attendance at your school, though you won't have the benefit of income-driven repayment plans or loan forgiveness programs. Private student loans offer a wider range of interest rates that are based on your credit score.

Here are some of the key differences between federal and private student loans:

	PRIVATE STUDENT LOANS	FEDERAL STUDENT LOANS
Maximum loan amount	Depends on lender (may be up to 100% total cost of attendance)	$7,500 annually for dependent undergraduates, $12,500 annually for independent undergraduates and 100% total cost of attendance for graduates
Interest rates	1% to 15%; may be fixed or variable	4.99% to 7.54% fixed for 2022-23
Fees	Varies by lender; often no fees	Origination fee of 1.057% to 4.228%
Benefits	High loan limits, low interest rates, the choice between fixed and variable rates	Access to income-driven repayment plans, long deferments and forbearances, no credit check required for most loans
Drawbacks	High rates for bad credit, limited forbearance options, no federal benefits	Lower loan limits, limited repayment terms
Qualification requirements	Depends on lender; often requires good credit or a creditworthy co-signer	Meet basic eligibility criteria

Applying for a student loan with a co-signer

A co-signer is a creditworthy friend or family member who takes on the responsibility of the loan with the borrower. Their creditworthiness can make it easier for the primary borrower to get approved for the loan and qualify for lower interest rates. The downside is that the co-signer is responsible for paying the loan if the primary borrower misses payments, and delinquency could affect the co-signer's credit score.

Many lenders have the option for co-signer release, which allows the borrower to release the co-signer from their obligation after a certain number of on-time payments are made.

How to improve your credit score for a student loan

If you don't have a co-signer or you have some time before you need to apply for a student loan, it's worth figuring out some ways to increase your credit score:

• Pay all of your bills early or on time. Your payment history is the most important factor in determining your FICO Score. Late payments are detrimental to your credit health, but making on-time or early payments on all of your bills can boost your credit score over time.
• Pay down other types of debt. The more debt you pay off, the lower your credit utilization, which makes up 30 percent of your FICO Score. If you have several types of debt, focus on high-interest debt and unsecured debt like credit cards first.
• Get a new credit account. If you don't have any credit history, sign up for a starter credit card. If you use your credit card to make small purchases and pay it off each month, you'll build positive credit habits and your credit history at the same time.
• Pay off accounts in default or collections. Consider paying off any late accounts prior to applying for a student loan. Collections accounts stay on your credit report for seven years, which could drastically reduce your chances of being approved for financing.
• Dispute credit report errors. Mistakes can happen, which is why it's smart to regularly check your credit reports and dispute any errors that could be negatively affecting your credit score. You can check your credit reports for free at AnnualCreditReport.com.

Student loan options for parents with bad credit

Parents with poor credit still have options to help finance their child's undergraduate or graduate degree. Parents should start first with a federal parent PLUS loan, which comes with some federal benefits and can cover up to the total cost of a child's education. Eligibility requirements for a parent PLUS loan are less stringent than those of private student loans, so parents with bad credit can still get approved; however, adverse credit history like defaults, foreclosure or bankruptcy will make it harder to qualify.

Parents can also look into private student loans. Many lenders have student loans designed for parents, many of which cover up to the full cost of a child's education and feature flexible repayment options. However, most private lenders have a minimum credit score requirement, so if you do go this route, look for lenders that accept borrowers with poor credit or those that take other factors into account. Parents can also apply for a loan with a creditworthy co-signer.

Student loans in the coronavirus pandemic

Like other financial products, student loans have been affected by the coronavirus pandemic.

Most notably, the federal government has introduced relief options for federal student loans. Through Aug. 31, 2022, borrowers with federal student loans are not required to make payments, and interest charges are waived.

Interest rates on federal and private student loans have also been low in the past few years, though rates are beginning to rise again as the economy recovers. Federal student loan rates for the 2022-23 school year are more than a percentage point higher than they were in 2021-22, and recent Fed rate hikes indicate that private student loan rates will almost certainly rise as well. If you've been considering taking out a new private loan or refinancing an old one, now is likely the best time, before rates rise further.

President Biden's student loan forgiveness proposals

On the campaign trail, President Biden said that he would like to forgive $10,000 of student loan debt for all federal borrowers. Student loan forgiveness could potentially happen with either congressional approval or executive action, and the Biden administration has suggested that a decision around forgiveness will happen before the federal forbearance period expires. In the meantime, the administration has been concentrating its efforts on improving existing student loan forgiveness programs, like Public Service Loan Forgiveness and borrower defense to repayment. Through these programs, billions of dollars' worth of student loan debt has been forgiven over the past year.

Should you still make student loan payments while waiting for forgiveness?

Student loan forgiveness is not guaranteed; if you stop making your student loan payments in the hopes that your loans will one day be wiped away, you could be setting yourself up for financial trouble.

That said, there's little harm in taking advantage of administrative forbearance now, especially if you're having trouble paying other bills. Because federal student loan payments are not required, you could temporarily pause those payments and instead put the money toward your private loans, credit card debt, an emergency fund or day-to-day bills.

The most valuable college majors

While you should never make your college major decision based on cost alone, doing research about your potential return on investment can help you make an informed decision about paying for college. In a Bankrate study of the most valuable college majors, STEM degrees earned the top 25 spots, while arts degrees fell near the bottom.

With that said, the value of your degree ultimately depends on the cost of your classes, the need to pursue a master's degree or doctorate and your personal fulfillment with your degree. It will be tougher to pay off student loans if you start your career with a low income, but your career choice could be worth it.

In terms of the raw numbers, these top five most valuable college majors could help steer your college decision:

Degree	Median income	Unemployment rate
1. Architectural Engineering	$90,000	1.3%
2. Construction Services	$80,000	1%
3. Computer Engineering	$101,000	2.3%
4. Aerospace Engineering	$100,000	1.9%
5. Transportation Sciences and Technologies	$86,000	1.8%

FAQs about bad- or no-credit student loans

Methodology

The best student loans for bad credit or no credit are accessible to many borrowers and feature reasonable interest rates. To select lenders, we first sought out lenders that are available across the United States and which feature a range of loan amounts and repayment options.

To narrow down the field, we then examined lender fees, APR ranges and eligibility requirements to see which lenders kept costs as low as possible for bad-credit borrowers. Lenders were then ranked based on unique features that appeal to a specific group of borrowers — for instance, borrowers applying for a loan without a co-signer or those seeking flexible repayment terms.

We also looked into income-share agreements, which can be a better option than student loans for borrowers who have no credit and no co-signer. The income-share agreements featured on this page have flexibile eligibility requirements and low rates.

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Source: https://www.bankrate.com/loans/student-loans/bad-credit-loans/

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