Best Options For Bad Credit Student Loans

Best Options For Bad Credit Student Loans
By Yvonne Suzannah

If you have bad credit and want to obtain funds to go to a college or university, you can. There are several options available for you to get the funding you need to attend two and four year college and university programs. Of course, finding student loans with very good interest rates is a lot easier if you have good credit rating or credit scores, education funding for those who have bad credit rating is still possible.

The most popular student loan is known as the Stafford loan, available directly through the US Department of Education. Why is this type of federal education loan so popular? The answer is because it doesn't consider credit rating as a major factor to qualify for a loan. The Stafford loan assumes that most applicants going to college straight from a high school and hence would most likely not have a credit rating yet.

However, if you have defaulted a federal education loan before, then to qualify for the Stafford loan can be very difficult as they will start checking your credit rating very carefully.

Another good option for bad credit student loans is the Perkins loans, it's a subsidized federal education loan offered by the US Department of Education. The Perkins Loans carry a fixed interest rate of 5% for the duration of ten-year repayment period and a nine-month grace period, so you start the repayment in the tenth month upon graduating.

On the other hand, the Stafford loans are available both as subsidized and unsubsidized loans. The interest on subsidized Stafford loans is paid by the federal government while the student is in school, however, student will still have to pay off the principle or total amount of the loan after graduation. For unsubsidized Stafford loans, there is an interest and students are responsible to pay all the accrued interests while they are enrolled in school. The interest may vary and is determined on the date the loan was approved (it's roughly 4-5%).

For students with bad credit or poor credit rating, obtaining student loans through private lenders may not be a good option as they would often charge very high interest rates, have poor payment plans and high penalties. The best option for bad credit student loans is therefore the federal education loans as they are not based on your credit rating to qualify.

There are many interesting topics on student loans, our website offers comprehensive resources on Bad Credit Student Loans as well as other types of loans. You can also download our FREE report: Guide to Student Loans - Unraveling the maze of student loans.

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