The Bankrate guide to choosing the best bad-credit or no-credit student loans
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When shopping for student loans you can use to pay for school, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of the publish date. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as student loan interest rates, loan amounts, fees, credit requirements and broad availability.
Best college loan companies for bad credit of 2021
| Federal student loans |
2.75% to 5.3%
|
Standard repayment is for 10 years
|
None
|
$12,500 annually for undergraduates and 100% total cost of attendance for graduate students
|
Overall student loans
|
| Earnest
|
Starting at 1.05% variable and 3.49% fixed (with autopay)
|
Not specified
|
$1,000
|
100% total cost of attendance
|
Flexible repayment options
|
| Ascent
|
2.11% to 12.94% variable, 3.26% to 14.5% fixed (with autopay)
|
5 to 20 years
|
$2,001
|
$200,000
|
Student loans without a co-signer
|
| Sallie Mae |
1.13% to 11.64% variable, 4.25% to 12.59% fixed (with autopay)
|
5 to 20 years
|
$1,000
|
100% total cost of attendance
|
Student loans with a co-signer
|
| Credible |
1.04% to 13.19% variable, 3.34% to 14.5% fixed (with autopay)
|
5 to 20 years
|
Varies
|
Varies
|
Loan comparison
|
Summary: Student loans for bad or no credit in April 2021
How to shop for a student loan with bad credit or no credit
If you're searching for a student loan with bad credit or no credit, start with the following steps:
- Determine 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, but private student loans can fill in the gaps.
- Fill out the FAFSA. The Free Application for Federal Student Aid (FAFSA) determines what type of federal aid you may be eligible for, and it's also required if you want access to federal student loans.
- Compare rates and terms. If you have poor credit, your best bet is applying for a federal student loan. Where private student loans from individual lenders tend to apply restrictive eligibility requirements, most federal student loans don’t even require a credit check. However, it's also smart to compare rates from private lenders, some of which may be forgiving of lower credit scores.
- Consider a co-signer. If you have no credit history or your credit score is on the poor side, you should also look into getting a co-signer for your loan. Having a co-signer with a good credit score can improve your chances of being approved for the student loan funds you need, and it may also get you a better interest rate and better loan terms.
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 and established financial history can make it easier for the primary borrower to get approved for the loan — especially if the primary borrower has bad credit.
With that said, both the primary borrower and the co-signer are responsible for the loan, so if the borrower misses a payment, the responsibility will fall on the co-signer. This is why co-signers should enter an agreement carefully; the primary borrowers' missteps could 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 certain requirements are met. Some lenders require a certain number of on-time payments, while others require the borrower to graduate from their school or college to qualify.
Federal vs. private student loans
If you don’t have a solid credit history, you still have options. Most federal student loans don't require a credit check, and the interest rate for each type of federal loan is the same for all borrowers. There are also private lenders that lend to borrowers with less-than-stellar credit, especially if you have a co-signer.
You can get approved for both private and federal student loans with little or bad credit, but it's best to do your research before applying so you don't hurt your credit score down the road by applying for loans that you don't qualify for.
Here are some of the key differences between federal and private student loans:
| Maximum loan amount |
Depends on lender (may be up to 100% total cost of attendance)
|
$12,500 annually (undergraduates) to 100% total cost of attendance (graduates)
|
| Interest rates |
1.04% to 13.19% variable, 3.26% to 14.5% fixed (with autopay)
|
2.75% to 5.3% fixed
|
| Benefits |
High loan limits, low interest rates, the choice between fixed and variable rates
|
Access to income-driven repayment plans, no credit check required for most loans
|
| Drawbacks |
High rates for bad credit, limited forbearance options
|
Lower loan limits, limited repayment terms
|
| Qualification requirements |
Depends on lender; often requires good credit or a creditworthy co-signer
|
|
How to improve your credit score for a student loan
If you don’t have a co-signer or you have some time to go before you need to apply for a student loan, it’s worth figuring out some ways to increase your credit score. Fortunately, there are some simple ways to do so.
- Pay all of your bills early or on time. Your payment history is the most important factor in determining your FICO Score. This is why late payments are so detrimental to your credit health, but it’s also why making on-time or early payments on all of your bills has the potential to boost your credit score over time.
- Pay down other types of debt. The amount you owe in relation to your credit limits makes up 30 percent of your FICO Score. The more debt you pay off, the lower your credit utilization will be. 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, you need some credit reporting to start building your credit score. The easiest way to do this is by signing 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 your credit history at the same time.
- Pay off accounts in default or collections. Finally, consider paying off any late accounts you have. After debt that’s in default, focus your attention on debts that are in collections. According to Experian, collections accounts stay on your credit report for seven years, which could drastically reduce your chances of being approved for a student loan.
Student loans in the coronavirus pandemic
Like other financial products, student loans have been affected by the coronavirus pandemic. Interest rates are at near-record lows, making this a good time to take out a new loan or refinance old private loans.
While these interest rates are low, students should still do their best to research to find the best rates, says Mark Hamrick, senior economic analyst at Bankrate. "Whether looking at federal or private student loans, meaning looking at loans offered by the government or business, potential applicants should do their homework when it comes to finding the lowest interest rates available." This is particularly important if you have bad credit, as some private lenders may have tightened their credit requirements in response to the low-rate environment.
The federal government has introduced its own relief options for federal student loans, as well. Through Sept. 30, 2021, borrowers with federal student loans are not required to make payments, and interest charges are suspended.
President Biden's student loan forgiveness proposals
Since the campaign trail, President Biden has been vocal in his push for student loan forgiveness. Biden has mentioned two forms of forgiveness: one-time relief of $10,000 for all federal student loan borrowers and yearly $10,000 relief for federal student loan borrowers who participate in national or community service, up to five years total.
Biden has stated that he is reluctant to pass these measures through an executive order, but student loan cancellation could happen with Congressional approval. House Majority Leader Chuck Schumer and Sen. Elizabeth Warren have pushed even further, calling for the one-time forgiveness to be increased to $50,000.
Regardless of what (if anything) is ultimately passed, borrowers who qualify for any type of student loan forgiveness have good news. With the passage of Biden's March 2021 stimulus bill, forgiven student loan balances will be tax-free through 2025.
Should you still make student loan payments while waiting for forgiveness?
If either of Biden's student loan cancellation measures pass, many student loan borrowers could see all of their debt wiped away. However, remember that forgiveness is not guaranteed; if you stop making your student loan payments in the hopes that your loans will one day be wiped away, you could be setting yourself up for financial trouble.
That said, there's little harm in taking advantage of administrative forbearance now, especially if you're having trouble paying other bills. Because federal student loan payments are not required, you could temporarily pause those payments and instead put the money toward your private loans, an emergency fund or day-to-day bills.
Details: Student loan rates for bad or no credit in 2021
While college loan lenders for bad credit can’t offer the best rates and terms, they do make it possible to borrow money you can use to pay for school. We compared the top loan options for bad credit to help you figure out which lender might work best for your needs and goals.
Best overall: Federal student loans
Overview: Most federal student loans don’t require a credit check, so these loans are easily the best option for students with poor credit or no credit history. Federal student loans also come with competitive interest rates, and you may choose from a variety of repayment options.
Perks: Federal student loans come with federal protections like deferment, forbearance and income-driven repayment plans that can lead to loan forgiveness after 20 to 25 years. Federal student loans may also be subsidized by the federal government, meaning that the government may pay your interest charges while you’re still in school.
What to watch out for: Federal student loans come with limits and may have higher interest rates than the lowest rates advertised by private student lenders. Also watch out for loan fees that are tacked on to your monthly payment throughout the life of the loan.
| Federal student loans |
| 2.75% to 5.3% |
| Up to $12,500 annually for undergraduates and up to 100% total cost of attendance for graduate students |
| Standard repayment is for 10 years, but repayment terms vary |
| Loan fees of 1.057% to 4.228% |
Best for flexible repayment options: Earnest
Overview: Earnest is a unique private student loan company based on the fact that it considers factors other than your credit score during the application process — although a minimum credit score of 650 is still required to be a borrower or a co-signer. Better yet, Earnest lets you choose among flexible repayment options to suit your needs.
Perks: Student loans from Earnest don’t charge an origination fee, prepayment fee or late payment fee. Earnest also bases its rates on a variety of factors outside of your credit score.
What to watch out for: You will need a minimum credit score of 650 to qualify.
| Earnest |
| Variable: Starting at 1.05% (with autopay)
Fixed: Starting at 3.49% (with autopay) |
| $1,000 to 100% total cost of attendance |
| Not specified |
| None |
Best for student loans without a co-signer: Ascent
Overview: Ascent offers unique non-co-signed student loans, which take into account your school, program, graduation date and other factors. Ascent claims that these loans are based on your future income, so you may be able to qualify if you're in a high-earning field of study. Check your personalized rates from Ascent today.
Perks: Ascent offers borrowers a 1 percent cash back reward upon graduation. You can also earn an autopay discount of 0.25 percent to 2 percent off your APR.
What to watch out for: Requirements vary depending on the type of loan you are applying for; depending on the loan, you may be subject to income requirements, as well as a debt-to-income ratio limit and a minimum credit history.
| Ascent |
| Variable: 2.11% to 12.94% (with autopay)
Fixed: 3.26% to 14.5% (with autopay) |
| $2,001 to $200,000 |
| 5 to 20 years |
| None |
Best for student loans with a co-signer: Sallie Mae
Overview: While Sallie Mae doesn’t disclose a minimum credit score for its student loans, it does have extremely low rates that could be attainable if you have a co-signer with good credit. Having a co-signer may make it considerably easier to qualify for a student loan, and that’s especially true if you need access to private student loans for bad credit.
Perks: Sallie Mae student loans come with no origination fees and no prepayment penalties. Its undergraduate student loans also come with four free months of Chegg Study, and you can get a 0.25 percent discount off your rate if you sign up for autopay.
What to watch out for: If you have poor or fair credit and don't want to use a co-signer, you may have trouble being approved for a Sallie Mae loan.
| Sallie Mae |
| Variable: 1.13% to 11.64% (with autopay)
Fixed: 4.25% to 12.59% (with autopay) |
| $1,000 to 100% total cost of attendance |
| 5 to 20 years |
| Late fee: 5% or $25; Returned check fee: Up to $20 |
Best loan comparison site: Credible
Overview: Credible is a loan comparison site, meaning you can enter your information once and see loan offers from multiple sources in one place. This means that Credible itself doesn’t have any minimum credit score requirements, but you’ll be able to gauge your ability to qualify across multiple student lenders, including bad-credit student loan lenders, in one place.
Perks: Instead of having to get student loan quotes from multiple lenders, Credible does the grunt work for you. There are also no origination fees, no service fees and no prepayment fees if you pay your loan off early.
What to watch out for: Credible is just a loan aggregator, so it does not extend loans itself. If you apply for a loan with Credible and you’re approved, you’ll be connected with a partner lender.
| Credible |
| Variable: 1.04% to 13.19% (with autopay)
Fixed: 3.34% to 14.5% (with autopay) |
| Varies |
| 5 to 20 years |
| Varies |
Frequently asked questions about bad-credit or no-credit student loans
Can I get a student loan with bad credit?
It is possible to get a student loan with bad credit. That said, having a bad credit score means that you will be charged higher rates.
Can I get a student loan with no credit check?
Many federal student loans do not require a credit check, but most private lenders do. If you don't have much credit, you may be required to add a co-signer to your loan.
What credit score do I need for a student loan?
Many private student loan lenders do not disclose credit score requirements, but it's likely that you or your co-signer must have a credit score in the mid-600s to qualify. The higher your credit score, the lower rates you'll receive.
Will applying for a bad-credit student loan impact my credit score?
Applying for a student loan could temporarily lower your credit score, since the lender will likely perform a hard credit check. However, you may be able to prequalify with lenders, which allows you to see what rates you're eligible for before going through the hard credit check. Any negative effects to your score should be temporary.
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, since most federal student loans don't require a credit check.
When it comes to private student loans, whether or not you can get approved without a co-signer depends on the lender. Use lenders' prequalification tools or check the minimum requirements to avoid multiple hard credit checks.
