Are Student Loans Available for Applicants with Bad Credit and No Cosigners?

One of the many challenges for student loan applicants with bad credit is finding money for college. With the rising costs of higher education many students are unable to meet the financial demands. A college education may not even be an option for some students who undoubtedly cannot afford to attend. And without academic or athletic scholarships, such an education would be impossible for some. But rather than give up students are turning to the help of student loans to pay for college. Are student loans an option for someone with bad credit and no co-signer? The answer depends on the lender.

Lender Option: US Government

First, government student loans require little or no credit history. A student with the worst credit, which is rare right out of high school, can still be eligible for a student loan with the federal government. The federal student aid program usually grants student loans on the basis of financial need rather than credit history. A review of the student’s education goals, along with his or her parents’ financial situation is usually all that is required to determine loan approval and amount. Parent loans, however, through the federal government are based on credit worthiness.

Furthermore, since federal student loans obtained by the student do not consider credit history no co-signer is needed. However, parent loans may require a co-signer because credit history is taken into consideration for such loans. The Federal PLUS Loan, for example, does require analysis of a parent’s credit before determining approval of a student loan.

Lender Option: Private Lenders

Private student loans are not as permissive as federal student loans. Private lenders usually require creditworthiness before considering a loan. This puts many students at a disadvantage. Coming directly out of high school most students have no credit history whatsoever. Some lenders may be quick to lend to such students, but others may be hesitant due to the high risk involved. Education costs can easily grow to tens or hundreds of thousands of dollars. As a result, private lenders have more risk involved with lending money to students. They may also consider things like employment history, resident history, and criminal history.

Consequently, a co-signer may be needed in most private student loan cases. The co-signer is usually a parent or someone with a good credit rating. A parent with bad credit probably can't be a co-signer for the student. The key to keep in mind with co-signers is that all signers on the student loan are responsible for repayment. In the event that debt collection is necessary, the lender will have the legal right to pursue collection from all signers on the loan.

Know The Lender

While getting a loan with bad credit and no co-signer may be difficult, it is not entirely impossible. A student must research the options available, know his or her financial situation, and apply accordingly. The federal student aid program would be an ideal place to start. Private lenders may be an option as well, but creditworthiness will always be their first consideration. That is why it is important to know a lender, whether its the federal government or a private one, before entering into a signed agreement with them.

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