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Student Loans

Student Loans for Bad Credit

After maxing out federal student loans and other financial aid, private student loan companies such as Funding U (best for undergrads) and Ascent (good for deferring payment) are loan options for students with bad credit.

Best private student loans for bad credit

  • Best for undergraduates: Funding U
  • Best for deferred repayment: Ascent
  • Best for international students: MPOWER
  • Best for income-based repayment: Edly

Bad credit doesn’t have to stop you from pursuing a college education. Student loans for bad credit are available from the federal government and certain private lenders.

Bad credit is no reason to be embarrassed. Many students haven’t had sufficient time to build a credit history. Your credit will improve as you make on-time payments on loans or credit cards.

We recommend maxing out your federal student loans before taking out private loans but realize federal loans have strict limits and may not cover all your expenses. If you still need funds, look into private student loans that don’t require a cosigner or apply for one with a creditworthy cosigner.

In this guide:

Compare bad-credit student loans

The following table gives an overview of student loan options for borrowers with bad credit.

Rates (APR)Repayment termsLoan amounts
Federal Direct Subsidized*4.99%VaryVary
Federal Direct Unsubsidized*4.99% or 6.54%**VaryVary
Federal Direct PLUS*7.54%VaryVary
Funding U7.49%12.99%10 years$3,001 – $20,000
Ascent9.91%13.24%15, 7, 10, 12, or 15 years$2,001*** – $20,000
MPOWER13.98%17.08%10 years$2,001 – $100,000
EdlyRepayment based on salaryN/A$5,000 – $25,000

*This is a federal student loan
**4.99% for undergraduates and 6.54% for graduate or professional students
*** Minimum of $6,001 for borrowers with a Massachusetts permanent address.

What credit score do I need for bad-credit student loans?

The credit score you need to qualify for a student loan depends on the lender. Some lenders may have different requirements for borrowers who can add a cosigner.

LenderCredit Score
Federal loansNo minimum credit score
AscentNo minimum for the outcomes-based loan

600+ for credit-based non-cosigned loans
Funding UNo minimum credit score
MPOWERNo minimum credit score
EdlyNo minimum credit score

Federal student loans for bad credit

Most federal student loans don’t consider your credit score when determining eligibility. Instead, the government will verify that you meet the basic requirements, e.g., being a U.S. citizen or eligible noncitizen enrolled in an accredited school.

To determine eligibility, students must complete the Free Application for Federal Student Aid (FAFSA) by the deadline. This form will determine whether you qualify for federal student loans and other financial aid such as grants and work-study.

This section will review the federal student loans available to students with bad credit.

Direct Subsidized Loans

Direct Subsidized Loans are provided by the U.S. Department of Education and are only offered to undergraduate students. These are available to undergraduate students with significant financial need.

The government pays the interest on Subsidized Loans during enrollment, the grace period, and all periods of deferment. The annual maximum borrowing limit for Subsidized Loans depends on the grade level.

  • Fixed APR: 4.99% for undergraduate students
  • Loan amount: Maximum aggregate amount of $23,000
  • Credit check: None
  • Repayment terms: 10 – 25 years
  • In-school repayment options: Payments are optional during enrollment. Full deferment is available.
  • Grace period: 6 months

Direct Unsubsidized Loans

The Direct Unsubsidized Loan is similar to the Direct Subsidized Loan, except interest will accrue during enrollment and deferment periods.

Interest rates are the same for Direct Subsidized and Direct Unsubsidized Loans for undergraduate students, but students can borrow more in Unsubsidized Loans. Limits vary depending on grade level and dependency status.

  • Fixed APR: 4.99% for undergraduate students and 6.54% for graduate students
  • Loan amount: Maximum aggregate amount of $31,000 or $57,500 for undergraduate students, based on dependency status, and $138,500 in total for graduate and professional students, including any loans you take out for undergraduate study
  • Credit check: None
  • Repayment terms: 10 – 25 years
  • In-school repayment options: Payments are optional during enrollment. Full deferment is available.
  • Grace period: 6 months

Direct PLUS Loans

Direct PLUS Loans can be taken out by parents of students (Parent PLUS) or graduate students (Grad PLUS) to help pay for educational expenses.

PLUS Loans are more similar to private loans than other federal loans. These loans require a credit check and have higher interest rates than other federal loans.

Credit requirements for the Direct PLUS Loan are less stringent than private loans. The government only checks to ensure you have no adverse credit history, such as bankruptcy or delinquency over 90 days. If you do, you can add an endorser (similar to a cosigner).

  • Fixed APR: 7.54%
  • Loan amount: Up to 100% of the cost of attendance minus other financial aid
  • Credit check: Yes, to look for an adverse credit history
  • Repayment terms: Between 10 and 25 years
  • In-school repayment options: Payments are optional during enrollment. Full deferment is available.
  • Grace period: 6 months

Best for undergraduates: Funding U

  • Eligibility is based on academic performance, not your FICO score
  • Every approved borrower is assigned a dedicated loan officer for support
  • Check your rate without affecting your credit

Funding U is an online lender that offers undergraduate student loans. The company’s loans are designed for students of all credit and income levels and are only available without a cosigner.

Here is more about Funding U’s student loans:

  • Fixed APR: 7.49%12.99%
  • Loan amounts: $3,001 – $20,000
  • Soft credit check: Get preapproved with a soft credit check
  • Repayment terms: Up to 10 years
  • In-school repayment options: Options include interest-only payments or $20 minimum monthly payments. Full deferment is not available.
  • Grace period: 6 months

Eligibility requirements for Funding U’s student loans for bad credit

To qualify for a Funding U loan, you must be a U.S. citizen, permanent resident, or have DACA status. You must be 18 or older. Only full-time students enrolled in a bachelor’s degree program at a four-year not-for-profit college are eligible.

Funding U has minimum GPA standards that vary depending on your year in school. In general, upperclassmen are more likely to be approved than freshmen.

Types of loans Funding U offers for bad-credit borrowers

Only undergraduates are eligible for loans. Funding U only offers fixed-rate loans.

Best for deferring repayment: Ascent

  • Only available to juniors and seniors
  • Get a 1% cash-back reward upon graduation
  • Choose between fixed and variable rates
  • Check your rate without hurting your credit

Ascent is a student lender offering two products for borrowers with bad credit: one with a cosigner and one without. The non-cosigned loan with no credit history required is only available to juniors and seniors. The cosigned loan requires a creditworthy cosigner.

Here is more about Ascent’s student loans:

  • Fixed APR: Between 12.30% and 13.24% for the non-cosigned outcomes-based loan
  • Variable APR: Between 9.50% and 11.90% for the Ascent non-cosigned outcomes-based loan
  • Loan amounts: $2,001 – $20,000 for the Ascent non-cosigned future income-based loan
  • Soft credit check: Qualify and see your rate with a soft credit check
  • Repayment terms: 5, 7, 10, 12, or 15 years
  • In-school repayment options: Interest-only payments, $25 payments, or deferred payments
  • Grace period: 9 months
  • Cosigner release: After 12 on-time payments

Eligibility requirements for Ascent’s student loans for bad credit

To qualify for the non-cosigned outcomes-based loan, you must be a junior or senior enrolled full-time. You must also have a GPA of 2.9 or higher. For the cosigned credit-based loan, students need a cosigner who’s a U.S. citizen or permanent resident.

Types of loans Ascent offers for bad credit borrowers

Ascent offers student loans for undergraduate and graduate students, including DACA and international students.

Best for international students: MPOWER

  • Available to students from over 190 countries
  • Doesn’t require a cosigner, collateral, or a credit history

MPOWER offers fixed-rate student loans to international students. These loans do not require borrowers to have a credit history. Instead, MPOWER focused on the student’s future earnings potential.

Here is more about MPOWER:

  • Fixed rate (APR): 13.98%17.08%
  • Rate reduction: 0.25% automatic payment discount
  • Loan amounts: $2,001 – $100,000
  • Term length: 10 years
  • In-school repayment: Must make interest-only payments while in school
  • Grace period: 6 months
  • Fees: Late payment fee

Eligibility requirements for MPOWER’s bad credit student loan

Students must be an undergraduate or graduate student within two years or graduating or about to begin a one- to two-year program. Must be attending one of MPOWER’s 350 approved schools in the U.S. or Canada.

Types of loans MPOWER offers for bad credit borrowers

MPOWER offers a single student loan undergraduates and graduates can use for tuition, living expenses, school supplies, and more.

Best for income-based repayment: Edly

  • Repayment is based on your income, up to a maximum amount
  • Must be a U.S. citizen or permanent resident who is a current college junior, senior, or grad student at a supported school
  • Check your eligibility without affecting your credit

Edly offers an income-based repayment loan for U.S. citizens or permanent residents who are college juniors, seniors, or grad students at a supported school. Repayment doesn’t begin until the borrower has a minimum annual gross salary of $30,000. Edly does not require a cosigner.

Here is more about Edly:

  • Loan amounts: $5,000 – $20,000 annually, with a $25,000 lifetime limit
  • Soft credit check: Yes
  • Minimum annual gross salary before repayment begins: $30,000
  • Repayment cap: A maximum of 2.25x the borrowed amount, which translates to a maximum of 23% APR

Eligibility requirements for Edly’s student loans for bad credit

Unlike other private lenders, Edly has strict degree requirements. Only students in a business, medical, or STEM-related field will qualify for an Edly loan. So if you’re majoring in art history or theater, you aren’t eligible.

Prequalify by inputting your college and major. If your major isn’t listed, you’re not eligible.

Types of loans Edly offers for bad credit borrowers

Edly offers loans for bachelor’s and master’s degree programs.

What options do parents with bad credit have?

Parents with bad credit can qualify for Parent PLUS Loans, which are available to parents of undergraduate students. The federal government will run a credit check if you apply for a Parent PLUS loan. Parents of graduate or professional students are not eligible for a Parent PLUS loan.

Bad credit won’t limit a parent’s ability to take out a Parent PLUS loan, but an adverse credit history can.

Some private lenders offer loans to parents of students, but most require a good credit score to be eligible. If credit is a concern for a parent, the best option may be to let the child borrow through one of the options listed above, where they can prequalify without a hard credit check and then compare offers.

Is there a credit check for bad-credit student loans?

All lenders will check your credit if you’re applying for a bad-credit student loan. You must supply your full legal name and Social Security number. Then the lender will notify you whether you’re eligible for a loan.

Checking your credit doesn’t always mean the lender will use it to determine eligibility. Check the lender’s language to see what role the credit check may play.

How to apply for bad-credit student loans

When shopping for federal or private student loans for bad credit, take the following steps to make sure you choose the best option.

  1. Exhaust all your scholarship and grant options. Apply for scholarships and grants before applying for a student loan because you don’t need to repay grants and scholarships.
  2. Check whether you are eligible for a work-study program. Work-study is a program where you get an on-campus job as part of your financial aid package. To land a work-study gig, complete the FAFSA as soon as possible because these positions are limited.
  3. Use federal student loans. Federal student loans often have lower interest rates and better repayment terms, including income-driven repayment plans and student loan forgiveness options. Complete the FAFSA to see what federal loans you are eligible for.
  4. Look for a creditworthy cosigner. A cosigner with a good credit score may help you qualify for private student loans with lower interest rates. The cosigner should understand the risks for cosigners before finalizing the loan application.
  5. Look into student loans for those without a cosigner. A few lenders offer student loans without a cosigner. These may have higher rates than federal loans or other private loans but could be necessary to help you cover college costs.

What if I was denied a bad-credit student loan? 

It doesn’t mean you can’t get another student loan if you’re denied a bad-credit student loan. See whether you are eligible with other lenders, and consider adding a creditworthy cosigner to improve your application.

If you can’t find a student loan you’re eligible for, consider other financing options:

Apply with a cosigner

A cosigner with good credit can boost your approval chances for another student loan.

When someone agrees to cosign a loan, they vouch for your creditworthiness. The loan paperwork legally ties the cosigner to the loan. So if you can’t keep up with the payments, the lender can require your cosigner to pay.

Serving as a cosigner is a significant financial responsibility, but many have family members or friends willing to offer a helping hand. Don’t be afraid to ask for help if you need it.

Personal loans

Personal loans aren’t specifically designed for students. But in most cases, you can use the funds from a personal loan as you see fit.

As a student, you might spend the funds on tuition or living expenses to keep yourself afloat. But make sure to read the fine print to confirm any spending restrictions.

Personal loans often have higher interest rates than personal loans. But depending on your situation, the added costs present an opportunity to stay in school.

Just know that personal loan lenders may have stricter eligibility requirements than student loan lenders, so your chances of being approved may not be any better than a student loan.

Get a strategic part-time job

It can be a challenge to work and attend school simultaneously. But the right employer could be the ticket to getting school paid for.

Many companies offer part-time workers tuition reimbursement opportunities. From the company’s point of view, it’s an enticing perk that helps talent stick around. As a part-time employee, you take advantage of an opportunity to fund your education.

Companies that offer tuition reimbursement to part-time employees include:

  • Amazon
  • Chipotle
  • FedEx
  • Home Depot
  • Publix
  • Starbucks
  • Target
  • UPS

Depending on the company, you might be eligible for tuition help on day one or need to wait several months.

Each company’s tuition reimbursement program has different rules. But part-time employment with the right company can cover some of your tuition costs.

FAQ about student loans for bad credit

Should I add a cosigner to my student loan?

If you have bad or no credit, a cosigner can improve your chances of qualifying for a loan. Many private lenders will require a cosigner because most students don’t have sufficient credit history to qualify for a loan.

If you have a creditworthy cosigner, apply for a loan with one of the lenders from our list of the best student loan companies.

Which student loan is the best for bad credit?

Each lender is different, and it’s hard to say which is best for borrowers with bad or no credit. Funding U or Ascent might be your best option if you don’t have a cosigner or a credit history.

Edly’s loan payments depend on your income, so it’s hard to compare how much you’ll pay compared to a traditional lender.

How can I improve my credit for better approval odds?

Improving your credit will make it easier the next time you borrow money. Start by paying all your bills on time every month. Your on-time payment history counts for 35% of your credit score; even one late payment can result in a 100-point drop. You can also set up automatic payments to avoid missing a payment.

The next most important factor is your credit utilization ratio: your credit balance divided by your total credit card limit. Try to keep that ratio below 10%. If it’s above 10%, it could hurt your credit score. If you already have a credit card, avoid opening new accounts or closing old accounts because doing so can lead to a short-term ding in your credit score.

1 Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: Rates are effective as of 10/01/2022 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner.  Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.