Fortunately, the answer to both of these questions is “yes”. Financially speaking, every student who wants to attend college in the United States should be able to go – thanks, in large part, to the federal student financial aid program.
Federal Student Loans
Federal loans are those loans that are provided to students or their parents by the federal government for the expressed purpose of funding one’s education. For the student with bad credit (or any student for that matter), your first step should be to file the Free Application for Federal Student Aid (FAFSA).
Through this single application, you are applying for every form of federal aid for which you are eligible. This is perfect for students with less-than-perfect credit, because the federal financial aid program is designed to make it possible for all students to afford college.
Your credit is not taken into consideration when you apply for federal aid because the government understands that most traditional college students have not yet had an opportunity to build their credit. The same eligibility requirements apply even if you have had the opportunity to build your credit (and have mismanaged it), or if you are a non-traditional or graduate student.
Federal financial aid may come in the form of loans or grants, some of which are offered specifically to the students with the most financial need. Federal Stafford Loans (especially of the “subsidized” variety) and Federal Perkins Loans are two such common loans.
Federal financial student aid is available to almost everyone without regard for credit. Federal student loans also do not require a cosigner, so they are a great option for students who may not be in a position to ask a parent to cosign. The same standards apply to state-sponsored loans.
The only situation in which your credit might be considered as part of your eligibility for federal student loans is if you have defaulted on a student loan in the past. Still, the requirements are much more flexible for federal student loans than for private student loans.
Scholarships and Grants
Scholarships and grants are forms of “gift aid” that do not need to be repaid, unlike student loans. They are offered both by the federal government and by private sources. In both cases, no credit check is required to determine your eligibility.
Gift aid provided to students may be either need-based or merit-based. The most common federal grant, the Pell Grant, is reserved specifically for students with the greatest financial need. If your finances exemplify your bad credit situation, then a need-based grant or scholarship certainly could come your way.
Private Student Loans
Sources that offer private student loans, such as banks, credit unions, or community groups, do consider one’s ‘creditworthiness’ when determining loan eligibility. While poor credit might not automatically make you ineligible, you probably will need to obtain a cosigner with good credit in order to obtain a loan.
Some providers of private student loans may take factors other than your credit (or the credit of your cosigner) into consideration also. For example, if you are going into a field in which large earnings are expected, then you might have a better chance of obtaining a private loan with poor credit.
A Word of Warning
Both federal student loans and now private student loans (since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) are considered obligatory debts. Except in vary rare cases, they cannot be discharged in bankruptcy.
If you have bad credit because of past money mismanagement, then think carefully about your ability to repay your student loans before obtaining them. It is crucial to develop a financial plan.
Student loans are available so that there is a financial answer for anyone who wants to go to college, graduate or professional school – including those with poor credit. While private student loans certainly can be useful for many people, federal financial aid and private scholarships and grants are great options that do not require a credit check.