Student Loans

Student Loans for Bad Credit

Bad credit student loans from the federal government and private lenders are available to students and parents with no or poor credit.

Ashley Sutphin Watkins

June 2, 2022

Many or all of the companies featured provide compensation to LendEDU. These commissions are how we maintain our free service for consumers. Compensation, along with hours of in-depth editorial research, determines where & how companies appear on our site.

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.

Always consider federal student loans first, but remember, these loans have limits and may not cover all of your expenses. After those, you can look into private student loans that don’t require a cosigner or apply for one with a creditworthy cosigner.

On this page:

Compare Bad Credit Student Loans

The following table gives an overview of student loan options for borrowers with bad credit. Always use federal student loans (marked with an asterisk) first before turning to private loans.

	Rates (APR)	Loan Terms	Loan Amounts
Direct Subsidized*	4.53%	Varies	Varies
Direct Unsubsidized*	4.53% or 6.08%**	Varies	Varies
Direct PLUS*	7.08%	Varies	Varies
Ascent	3.41% – 15.00%	5, 10, or 15 years	$1,000 – $20,000
Funding U	7.99% – 13.49%	Up to 10 years	$3,001 – $10,000
Edly	Repayment based on salary	N/A	$5,000 – $25,000

*This is a federal student loan
**4.53% for undergraduate and 6.08% for graduate or professional

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 simply see if you meet some basic requirements such as being a U.S. citizen or eligible non-citizen and being enrolled in an eligible school.

To determine eligibility, students need to complete the Free Application for Federal Student Aid (FAFSA).

In this section, we’ll go over 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 demonstrate financial need.

What’s great about subsidized loans is that the government pays the interest while the student is still in school at least half-time, as well as during the grace period and periods of deferment.

For subsidized loans, the annual maximum borrowing limit ranges depending on grade level.

Direct Unsubsidized Loans

The Direct Unsubsidized Loan is similar to the Direct Subsidized loan except that with the unsubsidized loan, the government does not pay the interest at any point and graduate students are eligible.

While interest rates for undergraduates remain the same, students are eligible to borrow more in unsubsidized loans. Limits range depending on grade level and dependency status.

Direct PLUS Loans

Direct PLUS Loans can be taken out by parents of students (Parent PLUS) and 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 and fees than other federal loans.

Even though there is a credit check for the Direct PLUS Loan, requirements can be less stringent than private loans. The government wants to make sure the applicant has no adverse credit history such as bankruptcy or delinquencies over 90 days.

Best Private Student Loans for Bad Credit

After maxing out federal student loans and other financial aid, private student loans can be used to bridge the gap.

The following companies are our 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 juniors and seniors: Ascent
Best for income-based repayment: Edly

Best for Undergraduates: Funding U

Check Rates

7.99% – 13.49%

N/A

$3,001 – $10,000

Funding U is an online lender offering student loans to undergraduates. 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 important information about Funding U’s student loans:

Fixed APR: 7.99% – 13.49%
Loan Amounts: $3,001 – $10,000
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
Unique Benefits: 0.50% autopay rate reduction

Best for Juniors and Seniors: Ascent

Check Rates

3.82% – 14.50%

2.71% – 12.99%

$1,000 – $20,000

Ascent is a student lender offering two products for borrowers with bad credit. The first, a student loan with a cosigner, is available to everyone, while the second, a student loan without a cosigner, is available to juniors and seniors. Here is some more information about Ascent’s student loans:

Fixed APR: 4.13% – 15.00% for the Ascent Non-Cosigned Future Income-Based Loan
Variable APR: 3.41% – 14.18% for the Ascent Non-Cosigned Future Income-Based Loan
Loan Amounts: $1,000 – $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, 10, or 15 years
In-school Repayment Options: Your options include monthly interest payments or monthly payments of $25.
Grace Period: 9 months
Cosigner Release: Not needed
Unique Benefits: The company offers borrowers 1% cash back upon graduation.

Best for Income-Based Repayment: Edly

View Rates

None

2.25x borrowed amount

$5,000 – $20,000

Edly offers an income-based repayment loan for U.S. citizens or permanent residents that are current 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.

Here is some more information about Edly’s loan:

Loan Amounts: $5,000 – $20,000, with a $30,000 lifetime limit
Soft Credit Check: Yes
Minimum annual gross salary before repayment begins: $30,000
Repayment Cap: 2.25x the borrower amount or an amount that translates to a 23% APR

LendEDU also put together this video on student loans for bad credit if you’d like to learn more about your options:

Alternatives to Consider

If you don’t have a good credit score or a creditworthy cosigner and are not interested in any of the above options, you could consider some of the following:

Scholarships. Applying for scholarships is always a good idea before taking out any student loans—regardless of your credit score. These don’t have to be repaid and are issued based on achievements (such as academic or athletic), financial need, or based on your personal background (such as ethnicity, interest, or location).
Grants. Like scholarships, grants do not need to be repaid. They are, however, typically based on financial need. The federal government (ex: Pell Grants), state governments, colleges, non-profits, and other private organizations usually offer grants.
Work-Study Programs. These programs give students part-time jobs while in college to help pay for their education. Your work schedule will be determined based on your class schedule, academic progress, and the amount of the work-study award.
Personal Loans for Students. If you are really in a pinch and need money to cover the cost of attendance, you may be able to get a personal loan designed for students. These should be used as a last resort, however, as they will likely have very high interest rates, especially if you don’t have a good credit score.

Recap: Steps to Shopping for Bad Credit Student Loans

When shopping for federal or private student loans for bad credit, there are specific steps you should take to make sure you are choosing the best option.

Make sure you’ve exhausted scholarship and grant options. You should always max out your scholarship and grant options before moving onto student loans since these don’t need to be repaid.
Check if you are eligible for a work-study program. After filling out the FAFSA, you may see that you are eligible for a work-study program. If you think you’ll have time to work some while taking classes, these can be a good way to pay for college without having to take on loans.
Use federal student loans. Federal student loans typically have lower interest rates and more favorable repayment terms (such as income-driven repayment plans and student loan forgiveness options). Fill out the FAFSA to see what federal loans you are eligible for.
Look for a creditworthy cosigner. If you can find a cosigner with a good credit score to add to your loan application, they may help you qualify for private student loans. Just know that there are risks for cosigners, so make sure they know what cosigning involves and the financial dangers of cosigning.
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 you would get with a typical federal or private student loan, but they may be necessary to help you cover college costs.

Author: Ashley Sutphin

Ashley Sutphin Watkins is a graduate of UNC-Chapel Hill where she studied journalism. She has worked as a journalist, content creator, and copywriter for nearly a decade, with a focus on personal finance, real estate, and healthcare. She now lives in Knoxville with her husband and young kids. During her free time, she enjoys traveling and enjoying the outdoors in East Tennessee.