Bad credit score is a sad reality for many families and it causes a lot of stress and worry for students who aspire to go to college and their parents. The costs of pursuing higher education are huge, and the majority of students need to rely on loans to finance themselves. If a family is already in debts due to mortgage, expenses for car or credit cards, their credits scores will reflect that and it might seem impossible to send their kid to college. Don’t give up just yet, until you’ve considered all your options.
Look for Scholarships
It’s a common myth that scholarships are reserved solely for students with 4.0 GPA or the ones who have outstanding sports talents. Make sure you’ve investigated all your options completely. There are scholarships for students who wear glasses, are left-handed, speak Klingon or excel at bowling, to state just a few of the unusual ones. You’ll need to devote some time and thoroughly research; you might find something designed for a unique, but average student, like yourself.
Using Federal Financial Aid
Federal financial aid is usually not determined based on your credit score; it is primarily awarded based on need. You should use all options available to you trough Department of Education. First you’ll need to fill out The Free Application for Federal Student Aid (FAFSA). Make sure it’s filled out completely and correctly, with all relevant and up to date information. These loans can be awarded to applicant with credit scores that are way less than stellar:
- Stafford – subsidized or unsubsidized
Completing your FAFSA application is free and it doesn’t require much of your time, and after that you’ll know which of these loans might be available to you. You should first choose subsidized loans if they’re available because you won’t have to pay off interests while you’re in school and up to six months after your graduation, the government will take care of that. Of course, after that period you’ll be responsible for all payments. They are granted based on your need, so make sure to correctly present the financial situation of the entire family in your FAFSA. Interest rates are less favorable on unsubsidized loans, but they are fixed, so you’ll always know how much you exactly owe and how much money needs to be repaid. PLUS loans require a cosigner with better credit so you should use them only as additional financial aid, when other options are exhausted. In general, any federal financial aid should be your first pick, rather than private loans, because you can be eligible for certain exemptions and reductions, if you experience serious financial hardships or if you make your payments diligently.
Ask for Personal Help
This might work based on your unique situation and your relationships with people who are in a more stable financial situation than you. Of course, absolute honesty is necessary. Have a long conversation with anyone who’s willing to help and make realistic promises. You can consider formalizing the deal, put the loan terms in a contract and use a third party to process payments and to make the loan official. If they can’t help you with their own money, but possess good credit scores, they might consider becoming a cosigner on a loan you’ll take.
Choose Privately Funded Loans
Getting a student loan from a private lender should be your last option. Different lenders find different credit scores acceptable, but, because they’re taking a risk with you their interest rates will be much higher. If you choose this option, take only the money that is absolutely necessary for your education. If you need a cosigner, be honest and upfront with them, and try to find a lender that is willing to release them after you repay a certain amount in a timely manner.
Personal loans or credit cards could also be used to pay for some of your college-related expenses, but we strongly advise against that. You are way less protected against unforeseen financial difficulties that way and not eligible for deferments while you’re still in school.