Pay for College – Even With Bad Credit

By on July 25, 2018

It may seem like the odds are stacked against you when it comes to getting a loan to pay for college. Coming out of high school, you don’t have a long credit history to draw from, so lenders see you as a high risk proposition. And if you are someone who’s returning to school, you might have some credit strikes against you along the way.

A short and positive credit history is better than none, so manage your revolving credit cards and paying your phone bills on time to maintain a healthy credit score. If you are applying for financial aid as a dependant, your credit information will be considered alongside your parents’, so your record of responsible credit behavior keeps you in good standing with lenders.

Even if you have strikes against you, all is not lost for you when it comes to borrowing money for school. There are loans available, mostly from the government, which do not require applicants to have top-rated credit, or do not require credit checks at all. The first step you must take to be considered for federal scholarships, grants and loans is to submit a Free Application for Federal Student Aid (FAFSA) application. The form is used to draft a snapshot of your college financial outlook, so that school financial aid offices can construct customized financial aid packages to help you pay for school.

Poor credit really shouldn’t keep you from obtaining your educational goals. If an adverse credit rating is getting in your way, here are some tips to help you maneuver around it when choosing the right college for you:

  • Appeal Loan Denials: Every education loan program has some system in place to allow families to appeal the outcome of their loan application. Your story will have to be compelling but if you have a good excuse for your non-existent or poor credit history, you may be able to get the bank to change their mind.
  • Consider a PLUS Loan Endorser: If you are denied on a Federal Plus loan, you have the option of appealing and/or you can see about getting an endorser (kind of like a co-signer)
  • Find Another Co-Signer: If mom and dad have a poor credit history, maybe you have an grandparent or family friend who is willing to serve as a co-signer. Some private loans now provide a co-signer release provision (which usually kicks in after on-time payments are made) that may make the co-signer more open to helping out.
  • Alternative Non-Credit Based Loans: If you are committed to pursuing a degree in one of a number of high-need fields like health science and teaching, you might find special financial aid incentives that apply to your academic major.
  • Borrow From Other Investment Vehicles: If you or your family has access to loan alternatives, such as Life Insurance policies, Trusts and Retirement funds, consider using those funds (hopefully with as little penalization and fees as possible) until your credit is repaired.
  • Shop Around: Different lenders have different credit criteria when it comes to awarding loans. Your credit may keep you from getting a loan at one place but be considered a marginal risk to another lender.
  • A Denial Can Be Good Thing: Did you know that if you are denied on the Federal Direct Parent Plus loan, the student is automatically eligible to receive an additional $4,000 in Direct Unsubsidized Federal loans?

Poor credit does not mean you are excluded from educational opportunities, but it may mean you have to be more creative with your financial planning. Responsible credit behavior leads to greater borrowing power for students and consumers, so learn more about how to repair your poor credit history and see a financial professional. There are credit counseling programs available through Sallie Mae and other student loan providers. And be sure to also managing your student debt as you go to build your own credit and protect any co-signers.

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About Amanda Jensen

FSN college advice columnist - Amanda gives parents and students knowledgeable advice on college planning, tuition financing and scholarships. With up to date and accessible information covering everything from personal finances to federal government policies, she is determined to make the college experience a painless one for all party's involved. You can find Amanda on !

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