Best student loans for bad credit or no credit: August 2022

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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 Aug. 11, 2022. 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. To learn more about how we selected lenders, see our methodology section at the bottom of the page.

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 choose to turn to income share agreements.

Income share agreements give you money for school, then accept a percentage of your income every month as payment. When you sign up for an income share agreement, you'll be given a few specific terms: the percentage of your income that you'll owe, the minimum and maximum amount you'll be required to pay each month and the length of time that you'll need to make payments.

Income share agreements can be beneficial for borrowers with bad credit, since many do not have strict credit score requirements like student loans do, and you won't be subject to high interest rates. However, keep in mind that your income share agreement payments will change alongside your income. If you end up in a high-paying job, you may end up paying back more than what you borrowed through your ISA. Still, the risk could be worth it if you're having trouble getting approved for other types of funding.

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 repayment period is 60 months, although 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.

Stride: Best income share agreement for career resources

Overview: Stride's income share agreements have transparent eligibility requirements and a plethora of online resources. Borrowers will be required to make 60 payments, though these payments can stretch over 10 years.

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.

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. Federal student loans are the easiest to qualify for, since most won't do a credit check and don't consider your credit score, and interest rates are the same for all borrowers. If you need to borrow private loans, you can look for lenders that have low credit score requirements, take other eligibility requirements into account or let you add a co-signer to your loan.

Federal vs. private student loans

Borrowers with poor credit can choose between federal and private student loans. Federal student loans are offered by the U.S. Department of Education and set one fixed rate for all borrowers. They also don't have a minimum credit score requirement, so they're the first place to turn if you have a spotty credit history.

Private student loans are offered by banks, credit unions and online lenders. Unlike some federal student loans, they often allow you to borrow up to the total cost of attendance at your school, though you won't have the benefit of income-driven repayment plans or loan forgiveness programs. Private student loans 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:

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, and delinquency 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 a certain number of on-time payments are made.

Can I get a student loan without a co-signer if I have bad or no credit?

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 your credit 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 first 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. If the parent does have an adverse credit history, they may add an endorser to the loan, who essentially serves as a co-signer.

Parents can also look into private student loans. Many lenders have student loans designed for parents, many of which 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, so if you do go this route, look for lenders that accept borrowers with poor credit or those that 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.

Student loans in the coronavirus pandemic

Like other financial products, student loans have been affected by the coronavirus pandemic.

Most notably, the federal government has introduced relief options for federal student loans. Through Aug. 31, 2022, borrowers with federal student loans are not required to make payments, and interest charges are waived.

Interest rates on federal and private student loans have also been low in the past few years, though rates are beginning to rise again as the economy recovers. Federal student loan rates for the 2022-23 school year are more than a percentage point higher than they were in 2021-22, and recent Fed rate hikes indicate that private student loan rates will almost certainly rise as well. If you've been considering taking out a new private loan or refinancing an old one, now is likely the best time, before rates rise further.

President Biden's student loan forgiveness proposals

On the campaign trail, President Biden said that he would like to forgive $10,000 of student loan debt for all federal borrowers. Student loan forgiveness could potentially happen with either congressional approval or executive action, and the Biden administration has suggested that a decision around forgiveness will happen before the federal forbearance period expires. In the meantime, the administration has been concentrating its efforts on improving existing student loan forgiveness programs, like Public Service Loan Forgiveness and borrower defense to repayment. Through these programs, billions of dollars' worth of student loan debt has been forgiven over the past year.

Should you still make student loan payments while waiting for forgiveness?

Student loan 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, credit card debt, an emergency fund or day-to-day bills.

The most valuable college majors

While you should never make your college major decision based on cost alone, doing research about your potential return on investment can help you make an informed decision about paying for college. In a Bankrate study of the most valuable college majors, STEM degrees earned the top 25 spots, while arts degrees fell near the bottom.

With that said, the value of your degree ultimately depends on the cost of your classes, the need to pursue a master’s degree or doctorate and your personal fulfillment with your degree. It will be tougher to pay off student loans if you start your career with a low income, but your career choice could be worth it.

In terms of the raw numbers, these top five most valuable college majors could help steer your college decision:

Methodology

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 flexibile eligibility requirements and low rates.