About Student Loan for Bad Credit
During college life, cash shortage is a common experience to us. When you are inclined to borrow money from loan providers to finance schooling, you would be denied after they trace your credit history. Until then, you will get to know how carelessly you have been spoiled – idle spending, over-indulgence, late repayment…and all of these generate two words “Bad Credit!”
Today many lenders refuse to offer financial aid to students with bad credit, as bad credit record has clearly indicated the high risk of providing loans to these “irresponsible” young adults. However, bearing bad credit is not the end of the world! Given the chances that many students delay the payments due to specific reasons beyond their control, which unexpectedly results in bad credit, you can still get financial support to fund your education – with the help of Bad Credit Student Loans!
These student loans for bad credit usually exist in the form of federal programs, designed to offer financial assistance for students going to university or college. Loans under this category are often government grants and generally have no requirement on your credit history or current standing. Thus, your bad credit history would not stand in your way to a student loan to pay for your college.
Typically, to be eligible for borrowing student loans for bad credit, you should:
- Be 18 years or more
- Be enrolled into any course
- Have a savings bank account
If for some reason you get bad credit and need loans to cover your college expenses, the following bad credit student loans may be ideal to enable you to secure the financing.
• The Federal Perkins Loan (or Perkins Loan)
This is a kind of need-based student loans, subsidized by US Department of Education, providing low-interest loans to finance American college students in their post-secondary education. Students enrolled into any of about 1,700 participating post-secondary institutions could obtain Perkins loans.
The Federal Perkins Loan carries a repayment term of 10 years plus a 10-month grace period, and the borrowers should begin the repayment since the 10th month upon graduation. Perkins loans bear a fixed interest rate of 5% for the entire repayment period. The loan amount you can borrow depends on the level of your study and the tuition fees of the college you are attending.
For instance, for the 2009 to 2010 academic year, Perkins loan limit for undergraduates is $5,500 a year, with a lifetime maximum amount of $27,000, while for graduate students, the limit is $8,000 per year, with the maximum lifetime loan of $60,000 (including the undergraduate loan).
• The Stafford Loan
This type of loans is open for students enrolled into accredited American intuitions. The loans are fully guaranteed by the US government, so if a student defaults, the federal government will make the repayment to the lender. There are two forms of Stafford Loan – subsidized and unsubsidized.
Subsidized Stafford loans are offered based on the students’ financial needs and the interest is paid by the federal government during the school years. While unsubsidized loans are available to all students, in spite of their economic conditions, and students are responsible for the interest the moment they are enrolled into school.
However, according to the Budget Control Act of 2011, subsidized Stafford loans for graduates and professional students will be eliminated since July 1, 2012. Unsubsidized Stafford loans will still be valid to all students.
• Federal Direct Student Loan Program
This program is committed to low-interest loans to pay for the education expenses after high school. The actual lender is the United States Department of Education, rather than any bank or financial institution. In fact, the Federal Direct Student Loan Program is the only government-sponsored loan program in our country. The loans are more closely related to your family income than your credit ratings. The repayment terms and requirements depend on the student’s financial need.
• Direct PLUS Loan
This type of student loans would be a great help for students with bad credit, where parents of students enrolled into eligible post-secondary institutions are responsible for the repayment solely. PLUS loans carry a fixed interest rate of 7.9% and annual loan limit is equal to the total education expenses less any other financial aid a student has received. The repayment of the loan starts from the date of full disbursement.
So, after learning a few types of student loans for bad credit, you may get to find that the hope is bright for you to seek financial help with a bad credit.
Following is a short guide telling you how to secure your opportunity to federal student loans.
1. Try to get a co-signer who has good credit history. This will help you secure favorable interest rates and repayment terms, regardless of your bad credit.
2. Go to the website of FAFSA (The Free Application for Federal Student Aid) – fafsa.ed.gov. Fill out the online application for Federal Student Aid. During this process, you will be required to give your personal info, such as your name, Social Security Number, date of birth, etc.
3. Select the school you are planning to attend on FAFSA. The federal government will forward your information to the school.
4. Check your mail regularly, for in a few weeks, you will receive a letter from the school, informing you of the loans and amounts you are eligible for.
5. Cross off the loans you would not want to get, finish the form and mail it to the school to complete the application process.
For most of us, college is a bridge connecting us with more career opportunities and a bright future. But many students may financially strapped by the tuitions and educational fees. Then applying for student loans is an ideal way to help you get through the hardship.