Private Student Loans Are Available for Students with Bad Credit as a Means to Pay for College

Anyone who wishes to go to college in this day and age has likely looked into getting a federal student loan such as a Stafford or Perkins loan. These are excellent options for students, especially those with bad credit, since they do not require credit checks and are offered at low fixed rates of interest. However, the maximum amount of money that you can borrow with a Stafford loan is $20k per year and Perkins loans are not offered to everyone – you must meet certain income qualifications.In the case where the money offered by private banks and not-for-profit institutions that is backed federally is not enough to meet all tuition and living expenses, then it is necessary for students to look towards private bank loans to fund their educational endeavors.Private Student LoansIf you are accepted to a high profile university with a big price tag or want to attend medical or law schools, the $20k offered by the federal government will not be enough. Therefore, looking towards private banks is your next best option. If the money that you need will be spent on student expenses such as tuition, books, or living expenses while attending school, then it is likely that even those with bad credit will qualify for these loans.Interest RatesBecause of your bad credit, the interest rates that are offered will not be as good as those offered to people with better credit scores. However, the interest rates offered on private student loans are often better than those offered by credit cards, especially to people with bad credit. Because of this fact, however, it is important to make sure that you have exhausted all of your federal loan options before applying for a private student loan.Payback TermsOn the flip side, there is a clear benefit to asking for private student loans as opposed to those that are offered federally: repayment periods. Especially in the case when you need to take out a significant amount of money to finance your education, the repayment period can make or break you in terms of your ability to remain current on your loan repayment after graduation. Generally federal loans such as Stafford and Plus loans need to be paid back in ten years following graduation, however private loans have a repayment periods that vary anywhere from 5-30 years. This way, depending upon your job prospects post graduation, you can make a plan to pay back your loan in the best time frame that suits you.Final ConsiderationsThough it is considerably easier to get a private student loan with good credit, those with bad credit are still eligible for these loans from many private and online lenders. There are several pieces of information that will come into play as a lender considers your application for a student loan. This includes the credit histories of both the student and his or her parents as well as the student’s legal history. The lender will basically run a full background check during the loan application process. In the case that the student’s credit and/or legal history is insufficient to qualify for a private student loan, the lender may suggest finding a cosigner such as a parent or guardian.You Can Do ItIf getting a college education is a real goal for you, there is no reason to let bad credit stop you from pursuing this dream. Once you have exhausted federal lending options, consider the possibility of a private student loan to meet all your tuition and living expenses.