Is a student loan possible with bad credit?

Stack of credit cards
The burden of bad credit can prevent borrowers from accessing a variety of financial opportunities, but in most cases, paying for a college education with loans can be an option even with a poor credit history. Students with bad credit, no credit or who have been through a bankruptcy, are likely to be able to cover their tuition and related expenses with a number of loan-based options, including federal and private loans.

Eligibility for government-sponsored education loans is dependent upon a number of factors, including income, and focuses on financial need more than personal credit history. As a result, students with bad credit can often secure federal education loan funding. Private education loans and federally-subsidized private programs may be more difficult to access for those with no credit or a poor credit score.

Interest rates for non-federal student loans vary greatly in part to accommodate the different credit backgrounds of borrowers. Students with poor credit may find that while they are not eligible to receive the best possible interest rates for private loans, available rates are still more attractive than the 10-20 percent interest rates common among general consumer and personal loans for bad credit borrowers.

In an effort to secure better rates or to become eligible for different types of student loans, borrowers may wish to secure the assistance of a co-signer, often a parent, whose promise to repay the loan in the event of a default can make bad credit less of an issue. University financial aid offices as well as individual lenders can help students identify which types of loans are best suited to their individual needs.