Best student loans for bad credit or no credit: March 2023
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and CreditCards.com, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.
Aylea Wilkins is an editor specializing in student loans. She has previously worked for Bankrate editing content about personal and home equity loans and auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information.
Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans.
Bankrate's ranking of student loan lenders for bad credit evaluates interest rates, fees, term lengths and features to help you compare companies side by side. The resources below can also guide you through the process of applying for a loan with bad credit or evaluating alternative funding options.
If you're looking for a student loan with bad credit, it's best to start with federal loans, since most don't require a credit check and all come with low rates and robust borrower protections. However, you can also pursue private student loans, which offer larger loan amounts and more customizable repayment. It may also make sense to look into options like income share agreements, which don't have strict credit score requirements.
The current federal student loan interest rate for the 2022-23 school year is 4.99 percent for undergraduates and either 6.54 percent or 7.54 percent for graduates. Private student loan rates currently range from around 2 percent to around 15 percent — but borrowers with poor credit should expect to receive rates near the top of that band.
Federal student loans don't rely on creditworthiness for approval or rates, making them the best student loan option for borrowers with bad credit. If you fall into this category, you'll need to fill out the Free Application for Federal Student Aid. This application opens on Oct. 1, and it's best to apply early.1
Calculate how much you need.Your cost of attendance will determine which lenders and types of loans you look for. Federal student loans typically have lower loan limits than private student loans, so you may need to combine multiple loan types.2
Fill out the FAFSA.The Free Application for Federal Student Aid (FAFSA) determines what type of federal need-based aid you may be eligible for, and it's also required if you want access to federal student loans.3
Compare rates and terms.If you have less-than-stellar credit, your best bet is applying for a federal student loan. However, if you're considering private loans, prequalify with multiple lenders to compare rates and terms.4
Consider a co-signer.If you have thin or no credit history, you should also consider getting a co-signer for your loan. A co-signer with a good credit score can improve your eligibility odds.
Compare income share agreements.Income share agreements lend you money for your education in exchange for a percentage of your income once you have a job. These often don't have strict credit requirements.2
Apply for additional scholarships.If you need only a few thousand dollars more for school, it's always worth applying for more scholarships. Your school's financial aid office may be able to point you toward relevant options.3
Consider enrolling half time.Your total financial aid might be reduced if you enroll part time, but your overall costs could also be lower. Enrolling half time for your first semester or first year of college could allow you to work a part-time job to cover what expenses you'd otherwise pay for with student loans.
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Competitive rates, no origination fees, and flexible repayment options.
The Bankrate scoring system evaluates lenders' affordability, availability and customer experience based on 11 data points selected by our editorial team.
An annual percentage rate (APR) represents the interest and fees you'll pay on top of your initial amount every month. A fixed rate will not change during your repayment period.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
|Fixed APR From|
Cost of attendance minus aid
Term: 10-15 yr
Apply on partner site
Income Based Repayment - No Cosigner Required
Get approved in minutes. Pre-qualify without affecting your credit score.
Edly Student IBR Loans are unsecured personal student loans originated by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.
Loans from $5,000 - $20,000 Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan. Payments deferred for the first 12 months during final year of education. After which, $270 Monthly payment for 12 months. Then $379 Monthly payment for 44 months. Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.
About this example
The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.
Apply on partner site
|Fixed APR From|
Term: 5-20 yr
Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 3/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
The Bankrate guide to choosing the right student loan with bad or no credit
When shopping for student loans, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of Febuary 13, 2023. Check the lenders’ websites for any updates. The top lenders listed below are selected based on factors such as student loan interest rates, loan amounts, fees, credit requirements and broad availability.
|LENDER||CURRENT APR RANGE||LOAN TERMS||MIN. LOAN AMOUNT||MAX. LOAN AMOUNT||BEST FOR|
|Federal student loans||4.99% - 7.54% fixed||10 to 25 years||None||$7,500 annually for dependent undergraduates, $12,500 annually for independent undergraduates and 100% total cost of attendance for graduate students||Overall student loans|
|Ascent||5.86% - 15.39% variable (with autopay); 4.62% - 16.24% fixed (with autopay)||5 to 20 years||$2,001||$400,000||Academic achievers|
|Funding U||7.49% - 12.99% fixed (with autopay)||10 years||$3,001||$20,000||Undergraduate borrowers|
Student loan alternatives for borrowers with bad credit
For some borrowers, the high interest rates and strict approval guidelines associated with bad-credit student loans may not be worth it. In this case, borrowers may turn to income share agreements.
Income share agreements (ISAs) give you money for school, then accept a percentage of your monthly income as payment. When you sign up for an income share agreement, you'll likely receive the following terms:
- The percentage of your income you'll owe.
- The minimum and maximum amount you'll be required to pay monthly.
- Your repayment term.
Edly: Best income share agreement for quick funding
Overview: Edly offers income share agreements of up to $25,000, with payments starting four months after graduation or once you earn more than $30,000. Borrowers can benefit from a quick application and approval, as well as perks like deferred payments after a job loss. Edly's website does not specify a payment period. Borrowers can choose to pay off the loan early.
Why Edly is the best income share agreement for quick funding: Edly advertises the fact that it has a quick application and approval process. According to the company, borrowers can check their terms within 30 seconds and complete the application within two minutes.
- No co-signer required.
- Payments deferred upon job loss.
- No minimum credit score.
- Does not disclose payment structure.
- Relatively low loan maximum of $25,000.
- Few direct customer service options.
Stride Funding: Best income share agreement for career resources
Overview: Stride Funding's income share agreements have transparent eligibility requirements and a plethora of online resources. Plus, borrowers only need to make up to 60 payments unless they reach the defined payment cap.
Why Stride is the best income share agreement for career resources: In addition to the basic perks of an income share agreement, Stride goes a step further by providing career resources and perks to its members, even after graduation. These include networking events, skill workshops and exclusive discounts.
- Robust online resources.
- Clear eligibility criteria.
- Maximum repayment period of 10 years.
- Does not disclose income share percentage.
- Relatively short grace period of three months after graduation.
- Funding limited to $25,000 per year.
Can you get a student loan with bad credit?
It is possible to get a student loan even if you have bad credit or no credit history. That said, it will be more difficult to qualify, and rates will be higher. Borrowers in this position should first consider federal student loans before turning to private loans for a number of reasons. For one, they're easier to qualify for and most don't consider your credit.Plus, the interest rates are the same for all borrowers — regardless of financial health.
Federal vs. private student loans
Those with poor credit can choose between federal and private student loans, but it's recommended that borrowers turn to federal loans first. The Department of Education sets one fixed rate for all federal borrowers, regardless of financial history and credit score.
Plus, they come with payment protections and forgiveness benefits that private lenders don't offer. For example, federal payments have been on hold and interest rates have been set to zero percent since March 2020 as a form of COVID-19 relief. As of now, payments are set to resume no later than 60 days after June 30, 2023, or 60 days after the Supreme Court rules on Biden’s student debt relief plan.
After applying for federal aid, borrowers can then explore other financing options to fill any funding gaps. Offered by banks, credit unions and online lenders, private student loans often don't come with borrowing caps, but do offer a wider range of interest rates that are based on your credit score.
Here are some of the key differences between federal and private student loans:
|PRIVATE STUDENT LOANS||FEDERAL STUDENT LOANS|
|Maximum loan amount||Depends on lender (may be up to 100% total cost of attendance)||$7,500 annually for dependent undergraduates, $12,500 annually for independent undergraduates and 100% total cost of attendance for graduates|
|Interest rates||2% to 15%; may be fixed or variable||4.99% to 7.54% fixed for 2022-23|
|Fees||Varies by lender; often no fees||Origination fee of 1.057% to 4.228%|
|Benefits||High loan limits, low interest rates, the choice between fixed and variable rates||Access to income-driven repayment plans, long deferments and forbearances, no credit check required for most loans|
|Drawbacks||High rates for bad credit, limited forbearance options, no federal benefits||Lower loan limits, limited repayment terms|
|Qualification requirements||Depends on lender; often requires good credit or a creditworthy co-signer||Meet basic eligibility criteria|
What to know about the FAFSA
Borrowers who are interested in taking out federal student loans must fill out the FAFSA every year. This form asks for information about your finances and your family's finances, but completing it won't affect your credit.
For each FAFSA cycle, the application opens on Oct. 1 prior to the award year and closes on June 30 of the award year. For 2023-24, the FAFSA opened on Oct. 1, 2022, and will close on June 30, 2024. However, deadlines vary by state and college. In some circumstances, you can make corrections after submitting the application.
Only U.S. citizens and eligible noncitizens may receive federal student loans through the FAFSA. DACA students may submit the application, but their aid is limited to state and institutional scholarships and grants.
Applying for a student loan with a co-signer
A co-signer is a creditworthy friend or family member who takes on the responsibility of the loan with the borrower. Their creditworthiness can make it easier for the primary borrower to get approved for the loan and qualify for lower interest rates.
The downside is that the co-signer is responsible for paying the loan if the primary borrower misses payments. Therefore, delinquent payments will negatively affect the co-signer's credit score. Many lenders have the option for co-signer release, which allows the borrower to release the co-signer from their obligation after a certain number of on-time payments.
Can I get a student loan without a co-signer if I have bad or no credit?
If you don't have a co-signer, your best bet at finding funding is federal student loans, as most don't require a credit check. The one exception is Direct PLUS Loans, which look for an adverse credit history but don't set a minimum credit score for approval.
With private student loans, whether or not you can get approved without a co-signer depends on the lender. Some have more flexible eligibility requirements, while others offer loans designed for borrowers without co-signers. These unique loans may use your academic performance or future earning potential to determine your eligibility and rates.
How to improve your credit score for a student loan
If you don’t have a co-signer or you have some time before you need to apply for a student loan, it’s worth figuring out some ways to increase your credit score:
- Pay all of your bills early or on time. Your payment history is the most important factor in determining your FICO Score. Late payments are detrimental to your credit health, but making on-time or early payments on all of your bills can boost your credit score over time.
- Pay down other types of debt. The more debt you pay off, the lower your credit utilization, which makes up 30 percent of your FICO Score. If you have several types of debt, focus on high-interest debt and unsecured debt like credit cards first.
- Get a new credit account. If you don’t have any credit history, sign up for a starter credit card. If you use your credit card to make small purchases and pay it off each month, you’ll build positive credit habits and history at the same time.
- Pay off accounts in default or collections. Consider paying off any late accounts prior to applying for a student loan. Collections accounts stay on your credit report for seven years, which could drastically reduce your chances of being approved for financing.
- Dispute credit report errors. Mistakes can happen, which is why it's smart to regularly check your credit reports and dispute any errors that could be negatively affecting your credit score. You can check your credit reports for free at AnnualCreditReport.com.
Student loan options for parents with bad credit
Parents with poor credit still have options to help finance their child's undergraduate or graduate degree. Parents should start with a federal parent PLUS loan, which comes with some federal benefits and can cover up to the total cost of a child's education.
Eligibility requirements for a parent PLUS loan are less stringent than those of private student loans, so parents with bad credit can still get approved. However, adverse credit history like defaults, foreclosure or bankruptcy will make it harder to qualify. Parents with adverse credit history may add an endorser to the loan, who essentially serves as a co-signer.
Parents can also look into private student loans, especially seeing as many lenders have student loans designed for parents. These loans may cover up to the full cost of a child's education and feature flexible repayment options.
However, most private lenders have a minimum credit score requirement. If you go this route, look for lenders that accept borrowers with poor credit or take other factors into account. Parents can also apply for a loan with a creditworthy co-signer if they have bad credit or if their initial application is denied.
Most federal student loans do not require a credit check, but private lenders do. However, many lenders offer prequalification, which allows you to see the rates and terms you're eligible for before you apply with no impact to your credit score.
You can get federal student loans from the U.S. Department of Education even if you have bad credit. This is because federal student loans do not require a minimum credit score. Some private lenders, like Ascent and Funding U, also make an effort to provide student loans to borrowers with bad credit.
Many private student loan lenders do not disclose credit score requirements, but it's likely that you or your co-signer will need to have a credit score in the mid-600s to qualify. The higher your credit score, the more likely you are to be approved and the lower rates you'll receive.
A bad credit score is one of the most common reasons borrowers are denied private student loans. Even if they don't disclose this information, private student loan lenders have minimum credit score requirements, so having any score under that threshold is grounds for denial.
Applying for a student loan could lower your credit score by a few points, since the lender will perform a hard credit check. However, you can prequalify with most lenders before applying, which allows you to see what rates you're eligible for with only a soft credit check.
Interest rates on federal and private student loans are rising as the Federal reserve hikes rates with the intent of slowing inflation. Federal student loan rates for the 2022-23 school year are more than a percentage point higher than they were in 2021-22, and 2022's rate hikes, along with the most recent rate hike in February of 2023, indicate that private lenders will likely raise rates in response. If you are considering refinancing or taking out a new private loan and don't expect rapid improvement to your credit score, it may be wise to act before rates rise further.
The best student loans for bad credit or no credit are accessible to many borrowers and feature reasonable interest rates. To select lenders, we first sought out lenders that are available across the United States and which feature a range of loan amounts and repayment options.
To narrow down the field, we then examined lender fees, APR ranges and eligibility requirements to see which lenders kept costs as low as possible for bad-credit borrowers. Lenders were then ranked based on unique features that appeal to a specific group of borrowers — for instance, borrowers applying for a loan without a co-signer or those seeking flexible repayment terms.
We also looked into income share agreements, which can be a better option than student loans for borrowers who have no credit and no co-signer. The income share agreements featured on this page have flexible eligibility requirements and low rates.