Bad Credit Student Loan

By: EconomyWatch Content   Date: 25 November 2009

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Rising tuition fees and increasing costs of books have saddled many students with a bad credit record. Such students can avail the bad credit student loan offered by the federal agencies and private organizations. Bad credit student loans are quite useful for students with bad credit or no credit at all. Apart from funding one’s expenses on future education these loans can be used to repair an existing credit record. 

Bad Credit Student Loan: Types

As per the US laws, there are two types of bad credit student loans available. The Federal Perkins Loan is made available through the various universities and colleges and is partly funded by the government. This loan is available at the low interest rate of around 5% with repayments to be made to the institute. The other type of loan, the Federal Stafford Loan can be subsidized or non-subsidized depending on the credit situation of the student. These two types of loans are available to students after they provide certain basic information about themselves and their family.

Another option available to students are the various types of federal grants. These include the Federal Pell Grant and the Federal Supplemental Education Opportunity Grant which are made available to undergraduates with exceptional financial need. These grants are sanctioned on need and criteria basis to students who have filled the Free Application for Federal Student Aid.

In addition to the federal loans for students, several loan management companies offer short term bad credit student loans without credit checks. Loans from private companies can be acquired at reasonable interest rates if the application is co-signed by a person who has a good credit record. The co-signor can be a parent, friend or even a relative.

Federal loan consolidation is another option available to students with a bad credit record. This program allows the student to consolidate all federal student loans into one single loan with a low monthly payment. However, all the federal student loans or grants are for limited amounts and may not suffice to fund education costs. In such cases bad credit student loans from private organizations can be used to fund the remaining education expenses.


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