How to Get a Student Loan Despite having Bad Credit
Education is becoming really important these days. With the increasing competition in the global arena, knowing a thing or two may not always be enough. That is why a lot of people are getting busy trying to find ways to afford college or graduate school. However, things are not always as easy when you have bad credit.
“How do I get that student loan with bad credit?” Well, a lot of people are not aware that there are actually student loans that can be obtained even with bad credit. These types of loans are called federal loans. It can either be granted for students or for parents. It doesn’t involve credit checks so it can be approved despite a low credit score.
The most popular type of federal loan for students is the Stafford loan. In this case, the student is the borrower, while the lender is an institution which can either be a bank, or in many cases, the federal government. Many people who apply for a Stafford loan have little to no credit history.
For students who really lack the financial capability, they can apply for a Perkins loan. With this type of loan, it is the school which becomes the lender but the government supplies the money. Also, this will not affect the student’s credit score. However, there is an exception. If the student is already in default on an existing loan, applying for a Stafford or a Perkins loan is impossible.
In paying for mortgages, loans can be refinanced and consolidated into another loan. This is also possible with student loans. For students who have multiple loans, they can pile them up into a federal consolidation loan and just pay for one loan on a monthly basis. Although there are some lender companies that check credit records, there are also those that don’t like Sallie Mae.
Private lenders are also available for student loans and some of them may not check one’s credit history. However, it is important for students under Stafford or Perkins loans to maximize their borrowing before considering private loans. This is because private loans can cost high interest rates which may not always be worth it. Then again, paying a federal student loan is not a walk in the park either.
According to the Federal Reserve Review Board of New York, there are around 37 million student loan borrowers who have outstanding student loans. Around 14% of these borrowers have at least one past due student loan account. Between 2004 and 2009, only 37% of federal student loan borrowers were able to manage paying on time. Moreover, for every student who defaults a loan, at least two more students are at risk of becoming delinquent.
“So how do I apply for a student loan?” There are actually ways of applying for different types of loans. The U.S Department of Education, for example, already has application forms ready online. By logging in to their website, students can also get a consolidated loan from the Federal Student Aid. The website provides other information that guide students in getting organized and following-up after applications have been filled (American Student Assistance, 2012).
The website of Sallie Mae provides a comprehensive guide in applying for various types of loans, including a smart option student loan. The company offers variable and fixed loan interest rates for graduate or undergraduate students as well as their parents. Interest rates range from 2.25% to 11.85%, depending on the repayment option..
Sallie Mae offers three ways to settle loans. Students can achieve maximum flexibility by paying as much as they like or not at all during school with their deferred repayment option. Students can also pay as low as only $25 per month with their fixed repayment option, while the interest repayment option lets students pay the interest while in school and enjoy average savings at the same time. Applications can also be done online.
Education is even more expensive than it was before. That is why more and more students are resorting to loans to go to school even if they have bad credit. On the other hand, it is a good thing that there are ways to finance a student loan even with bad credit through the federal government or through other institutions. After all, a good education is worth the price. What are your thoughts? Let us know.