Bad Credit and Federal vs. Private Student Loans

Where Borrowers Find Loan Approvals

Bad Credit and Federal vs. Private Student Loans

Students and bad credit… Well, there is some help. The parent of the Student Loan Network, Edvisors, has created a student credit education resource – The site offers a number of good articles on how to build and maintain good credit or fix your bad (”poor”) credit. Check it out when you have some free time – it might help both now and in the future once you begin working.

In the meantime -what loans are available for students with poor credit? First, consider the Federal Stafford Loan – there is no credit component to it so you should qualify. Learn more at The amount you can borrow from the Stafford Loan is limited and, of course, you need more money.

Private Student Loans, taken out in the student’s name, do require a credit check. We always recommend you apply for a private student loan with a cosigner who has good – or even better – great credit. Applying with a cosigner improves your chances of getting approved and getting a better interest rate. When someone cosigns for a loan of any type including a private student loan, they are committing to repay the loan in a situation where you the student and the main borrower cannot repay the loan for any reason. Cosigning for a loan is not a trivial thing and both the student and the cosigner should treat this as a very serious transaction.

The Federal PLUS Loan is another option. The PLUS Loan (or Parent Loan for Undergraduate Students) will be in your parent’s name – your credit is not a factor. If your parent has bad credit and gets denied for the PLUS Loan, you can then talk with your financial aid office and get additional funds through the Unsubsidized Stafford loan. Learn more at

The details for all these loan programs are available on our site, Do your research and work on improving your credit. If you need money for school, it makes sense to borrow funds at the best rates and in the best conditions possible.  Don’t forget that your future credit rating will be impacted if you are unable to repay these loans as per the agreements that you set up initially. Read all of the fine print carefully and if you have any questions do not hesitate to ask for an explanation. It will save you a lot of time and money in the long run.

Today we listened to a radio host talking about how students will never be able to afford to purchase a home. They are graduating with degrees into a shrinking workforce that is also paying less and less money for services that they may provide. Working in the service industry is going to make it very difficult to purchase a home, let alone repay their student loans.

Using student loans of all types, avoiding bad credit situations and graduating from college is a major achievement that any student can be proud of. Still with a large student loan to repay, many students find it difficult to survive on their own after they graduate without finding a good paying job in their chosen field.

Many students are living at home to conserve cash and the parents are more than willing to help, including helping with repayment of their student loans. The most important part is to recognize that your parents are helping a great deal and you should keep track of how much they help financially and be prepared to repay them at some point. This may be their retirement funds that they are using and most people want their parents to enjoy their retirement years without having to scrimp because they loaned their money to their son or daughter who never repaid their loans.

Aggressive  students will take the student loans, however they will also look for part time jobs while attending school and use every opportunity to conserve cash so that they can start their work life off as unencumbered as possible. Having personally been in this situation, there is a certain amount of pride on being able to say that while making use of student loans, I graduated with a minimal amount of debt which I was able to repay within five years and a great credit rating.

As the radio host expressed his concern about how students are going to be able to afford homes with all of the student loan debt, I could not help think about my own situation and how difficult it was at the time. I guess the end of the story is that hard work, saving and focusing on repaying your debt will put you on the right road to a good credit rating and being able to purchase a home of your own in a reasonable time frame.