Many people think that applying for student loans with bad credit would be futile. It is very difficult to secure student loans without cosigner support if the borrower has insufficient or bad credit. However, many student loans are subsidized by the Federal government and are intended to help students with low income to obtain a college or vocational school education. Some people refer to these as “bad credit student loans” or “student loans for bad credit.”
Applying for a student loan with bad credit is as simple as filling out the Free Application for Federal Student Aid. This can be done online in as little as 2-3 hours, assuming all of the necessary information is available. To fill out the application, a student needs:
- Student’s social security number
- A PIN (Personal Identification Number)
- Student’s marital status
- Student’s citizenship and state residency status
- Student’s education history
- Intended major course of study
- Expected course workload
- Interest in student loans and work study to supplement other aid
- Income taxes and deductions (including spouse’s)
- Spouse’s income
- Student’s dependency status
- Number of household members
- List of schools student is considering (up to 10)
- Parents’ level of education
- Parents’ income taxes and deductions
- Parents’ household assets
- Family members
- Parents’ state residency
- Parents’ age
The FAFSA becomes available each year on January 1, and should be submitted as soon as possible. Financial aid may be distributed on a first come-fist served basis at certain schools, so early submission is vital for maximizing the amount of assistance received.
A FAFSA on the Web worksheet available from the high school counselor will help in preparing to fill out the FAFSA accurately. The counselor will be able to answer any questions that arise so that delays and mistakes can be avoided.
Some common mistakes that are made when filling out the FAFSA are:
- Using a nickname instead of the legal name
- Leaving a field blank. If the question does not apply, use a zero.
- Not reporting all sources of untaxed income
- Using the W2 form instead of the 1040 federal tax return to report income
- Not including the student in household size, even if the student lives elsewhere
- Not signing the application or, if a dependent, not having parents sign
Once the FAFSA is filled out, have another person check for accuracy before submitting it. Be sure to submit the form as early as possible. Also check with the school the student will attend to determine what, if any, other forms should be submitted to the financial aid office, and the deadlines. Instead of simply aiming to get the forms turned in by the deadline, get the information submitted as early as possible to increase the chances of obtaining student financial aid.
If a loan is awarded, the student will need to submit a Master Promissory Note (MPN), which is a pledge to repay the loan and any interest accrued in a timely and responsible manner. Subsidized loans do not have to be repaid until the student leaves full-time status. Unsubsidized loans, which usually require a cosigner or good credit, may require repayment to begin immediately on disbursement of the money. Read documents carefully to be sure you fully understand what is required.
Whatever the financial condition, most students with good school records who want to pursue a college or vocational school degree should be able to do so. Some grants are available that will ease the way. Self-help measures such as work study or loans can also be obtained. Getting student loans with bad credit or student loans without cosigner support is not the impossible dream many believe it to be.