Student Loans for Bad Credit

Bad credit doesn’t have to stop you from pursuing a college education. The federal government and private lenders offer student loans for bad credit to help you cover college expenses.

Having bad credit isn’t something to be embarrassed about. If you’re like most students, it means that you haven’t had enough time to build a credit history. As you start making on-time payments on loans or credit cards, your credit will improve.

In the meantime, you should consider maxing out your federal student loans before taking out private loans. However, federal loans have strict limits and may not cover all of your expenses. If you still need more funds, you can 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
• What credit score do I need for bad credit student loans?
• Federal student loans for bad credit
• Best private student loans for bad credit
• What options do parents with bad credit have?
• Is there a credit check for bad credit student loans?
• How to apply for bad credit student loans
• What if I was denied for a bad credit student loan?
• Frequently asked questions about student loans for bad credit

Compare bad credit student loans

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

	Rates (APR)	Repayment Terms	Loan Amounts
Federal Direct Subsidized*	4.99%	Varies	Varies
Federal Direct Unsubsidized*	4.99% or 6.54%**	Varies	Varies
Federal Direct PLUS*	7.54%	Varies	Varies
Funding U	7.49% – 12.99%	10 years	$3,001 – $20,000
Ascent	9.91% – 13.24%1	5, 7, 10, 12, or 15 years	$2,001 – $20,000
MPOWER	13.98% or 15.01%	10 years	$2,001 – $100,000
Edly	Repayment based on salary	N/A	$5,000 – $25,000

*This is a federal student loan
**4.99% for undergraduates and 6.54% for graduate or professional students

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

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

Lender	Credit Score
Federal loans	No minimum credit score
Ascent	No minimum for the outcomes-based loan 600+ for credit-based non-cosigned loans
Funding U	No minimum credit score
MPOWER	No minimum credit score
Edly	No minimum credit score

Federal student loans for bad credit

Most federal student loans don’t take your credit score into account when determining eligibility. Instead, the government will just verify that you meet the basic requirements, like being a U.S. citizen or eligible non-citizen and being enrolled in an accredited school.

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

In this section, we’ll 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 who have significant financial need.

With subsidized loans, the government pays the interest during enrollment, the grace period, and all periods of deferment. For subsidized loans, the annual maximum borrowing limit 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: Between 10 and 25 years
• In-school repayment options: Payments are optional during enrollment. Full deferment is available.
• Grace period: 6 months

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Direct Unsubsidized Loans

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

While interest rates are the same for both Direct Subsidized and Direct Unsubsidized Loans for undergraduate students, students are able to 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 taken out for undergraduate study
• Credit check: None
• Repayment terms: Between 10 and 25 years
• In-school repayment options: Payments are optional during enrollment. Full deferment is available.
• Grace period: 6 months

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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 types of federal loans. These loans do require a credit check, and they have higher interest rates than other federal loans.

Even though there is a credit check for the Direct PLUS Loan, the requirements are less stringent than private loans. The government only checks to make sure you have no adverse credit history, such as a bankruptcy or a delinquency over 90 days. If you do, you are able to add an endorser, which is 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

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Best private student loans for bad credit

After maxing out federal student loans and other financial aid, private student loans can be used if you still have remaining expenses.

The following companies are LendEDU partners that have been reviewed by our Editorial Team and have been determined to be amongst the best options for bad credit student loans.

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

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Best for undergraduates: Funding U

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 some more information about Funding U’s student loans:

• Fixed APR: 7.49% – 12.99%
• Loan amounts: $3,001 – $20,000
• Soft credit check: Borrowers can get pre-approved 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.

There are also 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.

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Best for deferring repayment: Ascent

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 that students have a credit-worthy cosigner.

Here is some more information 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: You can 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 making 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 and 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 is 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.

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Best for international students: MPOWER

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

Here is some more information about MPOWER:

• Fixed rate (APR): 15.01% for undergraduates and 13.98% for graduates
• 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 that can be used buy undergraduates and graduates for tuition, living expenses, school supplies, and more.

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Best for income-based repayment: Edly

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

Here is some more information 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 borrower 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. For the most part, only students in a business, medical, or STEM-related field will qualify for an Edly loan. For example, if you’re majoring in Art History or Theater, you will likely not be eligible.

You can get prequalified by inputting your college and major. If your major is not listed, then you will not be eligible.

Types of loans Edly offers for bad credit borrowers

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

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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.

While bad credit won’t limit a parent’s ability to take out a Parent PLUS loan, 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 will have to supply your full legal name and Social Security number for them to view your credit history. Then, they will notify you if you’re eligible for a loan.

However, just because your credit may be checked doesn’t mean it will be used as a factor in determining eligibility. Check the lender’s language on this to see what role that credit check may have.

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 are choosing the best option.

1. Exhaust all your scholarship and grant options. You should apply for all the scholarships and grants you can think of before applying for a student loan because grants and scholarships don’t need to be repaid.
2. Check if you are eligible for a work-study program. Work-study is a program where you can receive an on-campus job as part of your financial aid package. To land a work-study gig, you should complete the FAFSA as soon as possible because these positions are limited.
3. Use federal student loans. Federal student loans typically have lower interest rates and better repayment terms, like 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. Adding a cosigner with a good credit score may help you qualify for private student loans with lower interest rates. The cosigner should understand that there are risks for cosigners before finalizing the loan application.
5. Look into student loans for those without a cosigner. There are a few lenders that offer student loans without a cosigner. These usually have higher rates than federal loans or other private loans, but they may be necessary to help you cover college costs.

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

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

If you can’t find a student loan that you’re eligible for, there are 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 are vouching for your creditworthiness. The loan paperwork legally ties the cosigner to the loan. So, if you aren’t able to keep up with the payments, the lender can require your cosigner to make payment.

Although serving as a cosigner is a significant financial responsibility, many have family members or friends may be 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 decide to 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 at the same time. But working for 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.

A few companies that offer tuition reimbursement to part-time employees include Amazon, Chipotle, FedEx, Home Depot, Publix, Starbucks, Target, and UPS. Depending on the company, you might be eligible for tuition help on day one or have to wait several months.

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

Frequently asked questions about student loans for bad credit

Should I add a cosigner to my student loan?

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

If you have a creditworthy cosigner, you should 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. In general, if you don’t have a cosigner and don’t have a credit history, Funding U or Ascent will be your best option.

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

How can I improve my credit for better approval odds?

Improving your credit will make it easier when you need to borrow money in the future. Start by paying all your bills on time every month. Your on-time payment history counts for 35% of your credit score, and 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 the credit utilization ratio, which is your current credit balance divided by your total credit card limit. Ideally, you should keep that ratio below 10%. If it’s above 10%, your credit score may be negatively impacted. Finally, if you already have a credit card, you should avoid opening new accounts or closing old accounts, as doing so can lead to a short-term ding in your credit score.

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¹ Ascent Student Loans are funded by Bank of Lake Mills, 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: www.AscentFunding.com/Ts&Cs. 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: AscentFunding.com/Rates. 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.