Student Loan Tips and Advice
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This month we are featuring student loans without cosigner support from Sallie Mae. Sallie Mae is a trusted private student loan company that offers flexible terms, student loans without cosigner help, and bad credit student loans. Please note that the Student Loans Center does not receive compensation from Sallie Mae and therefore this article is unbiased towards their services.
Please take the time to check out the video to learn more about their flexible terms and services. Enjoy!
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Getting a Student Loan with Bad Credit
It’s a tempting proposition, in the current job market, to try to go back to school instead of mailing out hundreds of resumes every week without effect — but if you’ve worn out your FAFSA and you’ve been unemployed for any length of time, you’ll almost certainly have to look into the market for student loans for bad credit individuals. A bad credit rating used to mean that a person wasn’t terribly responsible, but in the middle of a time of nearly double digit unemployment, all it means anymore is that you were one of the unlucky many who hasn’t been able to recover your livelihood yet. On the downside, most traditional banks still won’t touch you with an eleven foot pole — but the silver lining is that there are many smaller, private institutions that understand and are willing to take a risk on your college financing.
One thing you have to understand, however, is the inverse relationship between credit score and interest rate. You will find that there are, in fact, student loans for bad credit folks out there — but the interest rates on those student loans will be quite high. That’s not the kind of obstacle you can’t overcome, however — with a bit of financial responsibility and maybe some help from a kindly banker, you can often improve your credit rating over the course of a few years. Once you’ve done that, you can consolidate your student loans for bad credit adults and improve your interest rates.
This is all, of course, assuming that you don’t have a cosigner with a good credit score who can sign alongside you. If you do, acquiring student loans is much easier and more successful — it’s bad credit student loans without cosigner assistance that require significant flexibility and commitment to obtain. In general, the only major limitations on cosigners is that they must know you personally and have proven ability to be able to repay the loan if you fall short.
A few notes on repaying private student loans for bad credit folks: depending on where you get the loan from, such loans are almost always deferred until between one and six months after the date of graduation — giving you time to establish a source of income before they kick in. That said, many of them do have fairly strict penalties for nonpayment, including an increase of the interest rate.
So, a short review: if you have bad credit, the first thing you should do is check your options for federal college financing. If the government doesn’t have anything, ask around for cosigned loan options. If you must shoot for student loans without cosigner aid, accept that you’re going to have to take on one of the high interest rate student loans for bad credit individuals, and prepare yourself to engage the necessary level of fiscal discipline needed to be able to refinance at a lower rate before the deferment period ends.
Follow that plan, and you’ll find your way into college as easily as possible.
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Though it’s a difficult proposition that will take some dedication, finding student loans without cosigner assistance is possible, even in the today’s tough economic times. The most important thing you can have when you go on the search for no-cosigner student loans is a high credit score. Even if you don’t have that, it’s still possible to find ‘bad credit’ student loans — though you’ll have to work your butt off if you need bad credit student loans without cosigner help. Have faith, however, because it can be done: private college financing institutions are willing to negotiate with people in surprising circumstances given the recent recession.
In order to secure yourself a functional set of student loans without cosigner aid, the first thing you’ll have to do is search around a bit and find some private institutions that are willing to give out no-cosigner student loans, and if necessary no-cosigner student loans for bad credit individuals. Of course, in the Information Age, the best place to look is online — though there is something to look out for in that sphere. There are a lot of sites that will offer you an instant response on your student loans’ application, but those sites also tend to ignore mitigating circumstances and judge you purely on the numbers.
Ideally, then, you need to find a site devoted to college financing that is willing and able to have someone call you and talk to you about your specific circumstances. Of course, it’s your responsibility to make sure that you’re working with a legal and reputable site before you turn over any personal information, so it’s probably best to call them first. Generally the sites that offer ‘risky’ loans like student loans without cosigner presence tend to have real people pretty easily accessible on the other end of the line, so don’t hesitate — just call and verify quickly that the site is legit, and then fill out their forms.
Generally speaking, said forms will require you to provide your name, address, phone number, email address, date of birth, the total amount of student loans you’re seeking, and if you have it, the account number where your college funds need to be deposited. Obviously, while all of this information is needed to access the financial records the institution will need in order to authorize any student loans without cosigner authorization, it’s also exactly what a identity thief might want to mess with you. Thus, the precaution of the phone call.
Once you’ve finished the application, you’ll receive word back from the lender (often in the form of a phone call) within a short time. Keeping in mind that most such loans run to a maximum of about $15,000, you might not be done yet — sometimes it takes several such student loans in order to make up a couple of years’ worth of tuition. Each loan makes the next one harder to get, but if you’re persistent and you’re willing to take some hits on your interest rate and repayment terms, you’ll eventually find enough student loans without cosigner requirements that you’ll get into school — just keep looking!
Related Articles: Student Loans Without a Cosigner
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If your college loans, whether federal student loans or private student loans, are running out of control then college loans consolidation can save you a lot of headaches.
Over time many students find that have accumulated a series of education loans from several different lenders and that not only does this represent a considerably debt, but they are also having to pay out more money than they can afford each month.
At best this means that they are going to have to tighten their belts but, at worst, it means that they will start missing payments and end up with a bad credit rating – which is the very last thing you need when you are just starting your working life!
However, making use of a student loan consolidation service can help considerably by reducing the number of lenders you have to deal with, often to just a single lender. It can also reduce your commitment to a single monthly payment which, depending on the interest rates on your existing loans and the interest rate on your consolidated loan combined with an extended repayment period, can reduce the amount of money you have to find each month considerably. Indeed, in some cases, it can cut your monthly payments by more than 50%.
Just how you go about achieving college loans consolidation will depend upon the source of these loans.
If your loans have come from the government (for example Stafford or Perkins loans) then you will need federal education loan consolidation money and that in essence means a US Dept of Education consolidation loan.
Federal government student loan consolidation is only available for loans issued under the Federal Family Education Loan Program (FFELP) but allows you to consolidate these loans into one single loan and to reduce your monthly payments by extending the period of the loan. In this case consolidation is generally only available after you have completed your college course, together with any post-study grace period, and are fully responsible for the repayment of all federal loans.
When it comes to college loan consolidation for loans from private sources there is no ‘waiting period’ and you can consolidate these loan just as you would credit card or any other loans at any time on the open market.
The secret when it comes to loan refinancing is to consolidate your loans before you start to run into difficulties meeting your repayments and to ensure that any consolidation program you apply to will present you with a manageable repayment plan.
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The 2011 economy shouldn’t discourage you from your quest for a student loan, even if you have poor (or no) credit history. The possibility of obtaining a private student loan can also be difficult. If however you can find a suitable person to act as a cosigner and to guarantee the repayment of your loan then this can ease your path to a loan considerably.
Students often have few (if any) credit cards, no car loans and very rarely have a home mortgage loan which means that they simply have no credit history against which a lender can judge the risk in granting them a loan. And, in those cases where students do have a credit history, it is often less than favorable (as like many of us in our youth) because they have made some unwise decisions and overstretched themselves with the result that they have run into problems making their repayments.
In either case the lack of a credit history, problems with late payments and perhaps even defaulting on a loan will often make a student a high financial risk as far as many college loans lenders are concerned.
This means that loan officers, including those making decisions on behalf of the federal government student loans programs, will often approach financial aid applications from students in this situation with caution. In many cases, applications for higher education federal loans and private loans will be denied or, in borderline cases, loans may be approved but a higher interest rate will be charged to offset the risk and to compensate for higher default rates.
One way to counteract the lack of a credit history or a poor credit rating is for students to have a cosigner for their loan application. In many cases this will be one or both of the student’s parents and loan officers will look then at the parent’s credit history when deciding whether to grant a loan.
At the same time it is the parent’s credit rating which becomes the primary factor in deciding the interest rate to be charged and those with a good track record will typically get the best rates, while those with lower credit scores will usually pay a higher rate. The difference can appear small at first glance but can in fact amount to a substantial sum over the standard repayment period of 10 years.
For example, one popular cosigner program offers private student loans at 4% for borrowers with a good credit history rising to 6% for those with a poorer but nevertheless acceptable record. This 2% difference may not seem like much but can amount to more than $5,000 over the life of a normal loan.
It is not at all uncommon these days for students to require as much as $100,000 to finance an undergraduate education and, even if interest is paid from the outset and is not accumulated, interest at the Stafford loan rate of 6.8% is almost $567 per month or $6,600 per year. Lowering that interest rate to 5%, which is the current rate for a need-based Perkins loan, reduces these numbers to $417 and $4,820 respectively.
It should also be noted that these figures assume that repayment begins immediately. However, it is far more common for students to defer repayment until six months after leaving college which will increase these figures considerably.
Students with a cosigner with a good credit record can not only increase their chances of getting a loan in the first place, but can also reduce their total loan repayment very considerably.
Note: School loans that don’t require a cosigner for students with a poor credit history are not easy to find and you should be very cautious about any lender offering guaranteed student loans without cosigner support.
Related Article: Safely Finding Student Loans Without Cosigner Assistance
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Most federal student loans (such as Stafford and Perkins loans) and grants and scholarship programs (such as Pell grants) do not require a credit check to be carried out and provide a student with significant financial aid. These programs are however need based and frequently carry other criteria that might make it difficult to qualify.
Even if a student does qualify, these loans only cover a proportion of the total education bill in many instances. If students are caught in this position then they may turn to alternative personal college loans to make up the financial shortfall, but private alternative educational loans can also have their own set of problems.
A credit check will almost always be required and this is not a problem as long as you have a good credit history. The problem is that ‘good’ is very much a relative term and if your credit report is not quite good enough then you might find that you are paying more than the usual interest rates for credit loans.
Fortunately, all may not be lost though as it is possible these days to find student loans for bad credit as well as a standard alternative student loan for bad credit.
On top of the quoted interest rate there are further monetary implications to student loans with bad credit. Fees will usually be tacked on to nominal loan amounts and relatively small bad credit loans of $3,000 may easily have fees of 4% applied before distribution. This means that $120 of the total will not be seen by the student but nonetheless has to be repaid. As a guide, every 3% of fees is equivalent to an additional 1% on top of the normal interest rate.
Private bad credit college loans do however carry a couple of advantages.
The first and possibly most obvious one is that money is available. Private lenders make money from the interest and fees that they charge and so have a vested interest in making funds available to borrowers and they will try hard to see that each and every borrower qualifies for a loan, even in the face of a poor credit score. Federal lenders on the other hand operate to an inflexible set of criteria and there is typically no appeal if your application is turned down.
Not having to deal with that unfriendly and frequently irrational bureaucracy is another benefit of alternative personal finance loans. Private sector lenders have customer service departments that are there specifically to deal with questions so that borrowers can get the answers that they are looking for. Federal loan programs usually have help available as well, but the answers one often gets are more miss that hit in terms of quality.
Other practical considerations which make alternative bad credit student loans desirable include:
The fact that neither students nor parents have to complete FAFSA (Free Application for Student Aid) forms and provide a mass of supplemental documentation. Private loan applications have a tendency to be simpler and indeed the whole process is easier. However, interest rates and fees might be higher or lower depending on the individual program and whether or not you are looking for student loans for bad credit.
The most sought after alternative loans attract no fees and interest rates that are roughly equal to the prime rate. This is the rate which banks charge one another or their largest and favorite customers. Getting an interest rate at prime is a good deal and finding a rate at 1% below prime is a great deal. To obtain that sort of loan it is normally necessary for you to have an excellent credit history but you can also get such a loan if you have a cosigner who has a great credit history.
In the end, the best way to find out whether an alternative loan will meet your needs is to go out into the market and see precisely what is available.
An alternative college loan is a necessity for most students to make up a shortfall in Federal funding but the problem for most students is that they feel they need to start their search by looking for no credit check alternative student loans. Do not forget however that there is a difference between student loans for bad credit and loans for somebody who simply has no credit history. In addition, remember that loans can often be obtained providing you have somebody who is willing to stand as guarantor on the loan for you.
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With the constantly rising cost of college education many students find that, even with scholarships, grants and federal loans, they cannot cover the cost of college and need to turn to private low interest student loans to make up the shortfall.
Other students find that because, most government funding is issued on the basis of need, they are unable to qualify for sufficient funding to meet their needs.
While it is generally better and cheaper to seek federal funding in the first instant, many students find that dealing with the bureaucracy which accompanies any government scheme is something of a headache and applying for a private loan is much simpler.
It is also often possible to get a private loan at an excellent rate as this is a large market with hundreds of lenders falling over each other for your business.
There are however two significant hurdles which students need to jump.
The first is that of the credit check. Almost all private low interest student loans will require you to pass a credit check and this can be difficult if you are looking for private student loans options for bad or no credit. For many students this means finding somebody with a satisfactory credit rating to co-sign their application and to stand as guarantor.
The second is the requirement for immediate repayment. In most cases you will need to start repaying a private low interest student loan within a very short time after if it is issued. This often results in students borrowing more than they really need so that they can use some of the loan to make repayments and, while this is fine in the short-term, it can increase the overall cost of the loan considerably.
At the end of the day students will have to pick a route which best suits their needs and this may well include a private loan (or series of private loans). The secret however lies in doing your homework.
One important point to remember is that debt can mount surprisingly quickly and can rapidly spiral out of control. So, whatever else you do, don’t simply pick the easiest route, but choose the least expensive route and one on which you are going to able to meet your obligation for repayment. You can get fast and easy private student loans for bad credit but don’t be tempted to take on more than you can afford.
An excellent place to start your search is FinAid
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Although often referred to as student PLUS loans (or PLUS student loans) these are in fact federal loans which are made available to parents, rather than students.
Although many students will be in receipt of educational loans (such as Stafford loans) the ever rising cost of education means that there is often a gap between the actual cost of education and the monies received by way of scholarships, grants and loans. For this reason, the government introduced the PLUS (Parent Loans for Undergraduate Students) scheme in an effort to help to close this gap.
PLUS loans may either be granted under the Federal Family Education Loan program (FFELP), in which case loan monies come from private lender and interest is charged at 8.5%, or may be granted as a DIRECT loan from the US Department of Education, in which case interest is charged at 7.9%. A fee of up to 4% will also be added to the loan and this will be deducted proportionately from each loan disbursement.
Applicants must be applying for a loan in support of a dependent undergraduate student and the amount of any loan cannot be greater than the cost of education, less any financial aid (such as a Stafford loan) which the student is already receiving. Applicants must also be US citizens or nationals (or US permanent residents or eligible non-citizens) and have a satisfactory credit rating.
Repayments on PLUS loans are normally required to begin within 60 days of the initial disbursement of the loan.
PLUS loans are normally paid directly to the school and are applied to the payment of tuition, fees, room and board and other school expenses. If there are then funds remaining these can be paid over to the student or credited to the student’s school account, depending upon the wishes of the parent. Any surplus funds must however be used for educational purposes.
For Direct PLUS Loans parents must complete a Direct PLUS Loan application and promissory note (combined into a single form) which can be obtained from the school’s financial aid office.
For FFELP PLUS Loans parents must complete a PLUS Loan application which is available from the school’s financial aid office, lenders or the state guaranty agency. Once the school has completed its portion of the application form it is then sent to a lender for evaluation.
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In 1965 Congress examined government policy on student loans and established The Federal Family Education Loan Program (FFELP) to provide financial aid to students and today it receives more than 14 million student loan applications each year and disburses more than $80 billion dollars in funding to schools.
There are three main forms of student loan available to fund college education today:
In additional there is one further class of loan (both federal and private) for existing student loan holders:
Here we are concerned only with federal student loans details of parental loans, private loans and consolidation loans are covered on other pages of this website.
There two main forms of federal student loan – Stafford loans and Perkins loans.
Stafford loans are by far and away the most popular US Department of Education student loans and can be issued as either subsidized or unsubsidized loans.
To be eligible for a Stafford loan you must be a US citizen or national (or a US permanent resident or eligible non citizen) and be enrolled in (or accepted for) a suitable course at least as a half-time student at a school which participates in the Federal Family Education Loan Program. You must also not be in default on any other education loan. In the case of a subsidized Stafford loan you must also be able to show particular financial need.
The amount of money you can borrow will depend upon the stage of your course and whether or not you are classed as a dependent (in receipt of parental support) or independent student. Current annual limits are as follows:
| Dependent | Annual Loan Limit |
| Freshman | $3,500 |
| Sophomore | $4,500 |
| Junior or senior | $5,500 |
| Independent | Annual Loan Limit |
| Freshman | $7,500 |
| Sophomore | $8,500 |
| Junior or senior | $10,500 |
| Graduate or professional | $20,500 |
| Lifetime Limits | |
| Dependent undergraduate | $23,000 |
| Independent undergraduate | $46,000 |
| Graduate or professional | 138,500 |
Interest will be charged on the loan from the date on which it is issued. For applicants granted a subsidized loan this interest charge will be paid by the government during the period of education and for an agreed period (usually 6 months) following the completion of studies. For unsubsidized loans the student is responsible for interest payments throughout the life of the loan. Interest is charged at a fixed rate determined by the year in which the loan is issued.
A fee of up to 4% will also be charged and this will be deducted proportionately from each loan disbursement.
The standard repayment period for a Stafford loan is 10 years with monthly repayments representing the repayment of both capital and interest. In the case of subsidized loans, while the government makes interest payments initially, capital payments are not made. For unsubsidized loans the student may either make interest payments while undergoing study (and for up to 6 months after completion of the course) or these can be added to the loan. In both cases capital repayment is not required to start until 6 months after the completion of study.
Perkins loans are similar in nature to Stafford loans but are designed specifically for students in financial need and, although they are funded by the US Department of Education, they are issued by schools on the basis of need.
Interest on Perkins loans is fixed at 5% and undergraduates may borrow up to $4,000 each year (with a lifetime limit of $20,000) and graduates up to $6,000 a year (with a lifetime limit of $40,000 – including any undergraduate loans). Loans are normally repaid over a period of 10 years, dependent upon the amount borrowed.
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