It might seem that students, more than any other group, should have the hardest time when it comes to getting loans. This is because they are famed for having no money, but the fact is that the vast majority of students do work to get through college. What is more, their prospects are usually good, so lenders are open to granting student loans.
The basis of this willingness to lend to people with little money is the idea that a student today is a successful executive tomorrow. So, investing in their education is as much in the interests of the lenders as it is the students borrowing. And so, it is even possible to get loans approved for students with bad credit.
However, the open-mindedness that lenders generally have towards students is limited, and there are criteria and conditions that must be met before they give the green light to loans for students with bad credit. What is more, there is a variety of lending options available to students worth considering.
How Students Get Bad Credit
For most of us, getting a bad credit score is due to some poor money management or some bad luck in the employment stakes. So, how is it possible that bad credit is a factor when lenders consider approving student loans?
Well, credit ratings are designed to show whether a borrower can be trusted to repay their loans or not. The problem is that if we have never taken out a loan before, there is no evidence to suggest we are trustworthy. So, loans approved for students with bad credit often actually mean loans approved for first-time borrowers, who are students.
Alternatively, some students have already spent some time in the big bad world and return to college to enhance their employment and career prospects. So, when they seek loans for students with bad credit, it is because they have some financial baggage with them when re-entering the classroom.
Range of Loan Options
It is always a good idea to seek advice on the student loan options available, especially since there is such a wide range. A college campus is certain to have a financial aid office, where counsellors can fill students in on whether private or public loans are the best way to go.
Public loans are government guaranteed loans that are open to students that require financial aid in paying college fees. They are not open to just anyone, which is why they are amongst the most common loans approved for students with bad credit. The advantage with these is that credit checks are not a factor, though proof that aid is needed is. They also boast very flexible repayment terms.
Private loans, however, are those provided by banks or credit unions and come with no government guarantee. However, often these loans for students with poor credit are available with repayments delayed until after graduation, taking some of the pressure off.
Get a Cosigner
Of course, one of the best ways to secure student loans is to get a cosigner. The reason is quite simply because the lender wants to know that they can trust the borrower to repay the loan. When bad credit is a factor, showing support from a person with a good credit rating helps to convince them it is the case.
So, loans approved for students with poor credit often are done so on the basis that a fully-employed individual has promised to cover the repayments in the case that the student himself is unable to.
These are just a few options for loans for students with bad credit, but your financial aid office can advise on more. Be careful to choose the student loan that suits your situation, and remember delayed repayments does not mean no repayments.