Here are seven other ways to help pay for college:
- Grants. Colleges, states, and the federal government give out grants, which don't need to be repaid.
- Ask the college for more money.
- Work-study jobs.
- Apply for private scholarships.
- Take out loans.
- Claim a $2,500 tax credit.
- Live off campus or enroll in community college.
If you have a low credit score, the best loan option for you is federal student loans. These loans are funded by the federal government and are easy to apply for. No matter what your credit score is, you will be eligible as long as you apply. To apply for these loans, fill out the FAFSA.
The maximum amount you can borrow depends on factors including whether they're federal or private loans and your year in school. Undergraduates can borrow up to $12,500 annually and $57,500 total in federal student loans. Graduate students can borrow up to $20,500 annually and $138,500 total.
Most student loans that don't require a co-signer are federal student loans. To apply for these, you'll need to fill out the FAFSA, which is available for free online at fafsa.ed.gov. This form will collect various financial details of the student to determine financial aid eligibility.
Why you were deniedLenders may look at your employment history, credit score, debt-to-income ratio, and enrollment status at your school. One of the most common reasons why a student might not qualify for a private student loan is because they don't meet their lender's FICO® Credit Score criteria.
You can get a private student loan without a parent, as well, but there's a pretty big catch. Private student loans generally require a creditworthy cosigner, but the cosigner does not need to be your parents. The cosigner can be someone else with very good or excellent credit who is willing to cosign the loan.
Thin credit history is one of the most common reasons why student loans are denied. Fortunately, there is a way around this. If you can get a credit-worthy cosigner, you will be less likely to be denied student loan with cosigner.
To qualify for a federal student loan, you must meet certain eligibility criteria, such as: You are a U.S. citizen or eligible non-citizen. You have a valid Social Security number (with a few rare exceptions)
To qualify for financial aid, students must first file a Free Application for Federal Student Aid. The FAFSA season opened Oct. 1 for the 2019-2020 school year, but it's not too late for students who haven't filed.
Parents with bad credit have several ways to help their students pay for college: federal student loans, helping with the scholarship search, and filing special circumstance forms to boost financial aid awarded.
The maximum amount you can borrow each academic year in Direct Unsubsidized Loans ranges from $5,500 to $12,500 for undergraduates, depending on your year in school and your dependency status. Direct Unsubsidized Loans have an annual limit of $20,500 for graduate or professional students.
There are three types of federal student loans:
- Direct Subsidized Loans.
- Direct Unsubsidized Loans.
- Direct PLUS Loans, of which there are two types: Grad PLUS Loans for graduate and professional students, as well as loans that can be issued to a student's parents, also known as Parent PLUS Loans.
It's now harder to get a Sallie Mae loan if you come from a bad credit background, either due to your own credit or the credit of co-signers such as your parents. According to Sallie Mae, choosing the interest repayment option can save you around 20% of your loan cost compared to the deferred repayment option.
From the biggest online student lenders like Sallie Mae to smaller, online-only lenders, you will probably find a minimum credit score required for a private student loan. Some lenders require a minimum credit score around 600 to 620, while others may require even better credit.
Student loans affect your credit report and credit scores, including FICO scores, the same way as any other debt on your credit report. Account information, such as the amount of the loan, your monthly payment amount, and your payment history are all factored in when a credit score is calculated.
Short answer: it takes around 1 to 3 weeks to process a federal student loan, and 2 to 10 weeks to process a private student loan. But there's much more to know. Many college students end up taking out student loans. Whether that means federal or private loans, there's a waiting period before you get the money.
Sallie MaeSallie Mae, one of the most popular private student loan lenders, also offers private student loans without a cosigner. Once again, you must have good credit to be approved. If you're going for undergrad, it's unlikely you have enough history for approval.
Total limitIf you're independent of your parents, you can borrow a little more — up to $12,500 a year, and $57,500 in total. But you can't take out more than $23,000 in subsidized loans as an undergraduate.
