Student Loans – A Beginner’s Guide To Bad Credit, Other Loan Options

Most college students have to seek out student loans in order to pay for school. Easy student loans – no cosigner needed – are the most sought after type of loan out there because unfortunately not all college students are able to get approved for the money they need. This is because many loans require cosigners, and some students don’t have parents, other relatives, or friends who are willing or able to sign off on loans for them. In spite of the fact that the Wall Street Journal recently reported that student loan debt is higher now than credit card debt, there are still many students who need cash for school can’t get loans because of cosigner requirements.

Potential college students have no shortage of options when it comes to getting student loans. There are a variety of different companies and organizations that offer them, some of which are government-based. But what is the best place to get a student loan? With all these options, it’s no wonder that many people feel completely overwhelmed when trying to decide where to apply.

Government Options

College students who find themselves in a predicament where they need a cosigner but cannot find one should do a little digging for student loans not requiring cosigners. Loans like this do actually exist, and many are offered by the government, which is considered by many to be the best place to get a student loan. A great example of government loans is the Federal Perkins Student Loan program. Students are often able to obtain approval for the Perkins loan without cosigners. Another bonus is that the Perkins loan generally comes with very low interest rates.

The U.S. government guarantees student loans. Anyone, even someone with bad credit, is able to get a student loan. Now, there is no need to worry if you are headed off to college as a freshman with no credit, or going back to school as a student with bad credit. If you need money to support your education, it is STILL possible to get student loans with bad credit and no cosigner!

Financial Aid

More than $170 billion in financial aid is available to help pay for college, according to Student Financial Aid Services, Inc. More than 90% of that money is available to those who file their federal financial aid applications. The Free Application for Federal Student Aid is also known as FAFSA. This application helps colleges determine if a student is eligible for a federal, state, or college-sponsored financial aid like grants, educational loans, work-study programs, etc. To see if you are eligible, or to apply, visit the FAFSA website.

Prospective college students shouldn’t rule out financial aid as an alternative to student loans. Keeping grades up and working hard during school helps to ensure that financial aid and scholarships will be granted. There are several different organizations offering financial aid in addition to the government, and it’s well worth taking the time to apply because approval is a possibility.

Online Student Loans

There are some lenders who offer easy student loans – no cosigner needed – online. Applying is quick and easy and only a few important documents are needed to get the loan process started. In spite of the ease, online signature loans should be checked out carefully for legitimacy by those who apply. Identity theft is always a concern when information is transmitted over the computer.

What is the Best Place to Get a Student Loan?

Here are some of the more popular places to get a student loan.

Citi Student Loans

Many up and coming college students end up borrowing money for school through Citi Student Loans, and this company may be the best place to get a student loan that isn’t affiliated with the government. Most people have heard of Citi – they are pretty well known lenders nationwide – but not everyone is aware that they offer student loans. Through Citi, people can apply for graduate, undergraduate, law, and health student loans. It’s also possible to apply using a cosigner, which might increase a person’s chance of getting a loan approved.

Stafford Student Loans

Stafford student loans are federal loans, and a large number of people believe that Stafford is the best place to get an easy student loan, and with many cases no cosigner needed. One of the best things about getting a loan through Stafford is that the money is typically obtainable regardless of a person’s credit score. Students are also generally not required to pay back any borrowed money until six months after graduation, which frees up lots of time to concentrate on school and other important things rather than spend time in school worrying about financial issues. You’ll also be able to manage loan deferments and hardships right through the Stafford Loans website.

PLUS loans

PLUS loans are a form of federal student aid, but they work a little differently than most student loans. With PLUS loans, parents generally borrow the money for their children’s tuition. The interest rate is low at only 7.9 percent, but parents must have good credit in order to qualify. College students may also apply for PLUS loans on their own as long as they are either graduate or professional students. PLUS loans are a great alternative to student loans for unemployed people because they offer parents the chance to cover tuition costs for their children who may not have a source of regular income.

Student Loans For Unemployed

If you’re unemployed, you can actually get a student loan at most places, which is different from other loans like personal, home, and auto loans. If you are unemployed and looking for a student loan, or to go back to school, you would undoubtedly be eligible for financial aid, since that is determined in part by your job status and annual income. Federal student loans, and perhaps those offered by your school (provided it is not a private institution) are usually offered to those who are unemployed.

Out of High School, and No Job? Ask Your Parents For Help With Your Student Loan

If you are under 22 years old, the FAFSA (which determines your financial aid eligibility) will use your parents’ income. Is there a chance that your parents might want to help out with your tuition costs? If they would like to help you and also have a decent credit scores, they may be able to obtain a student loan on your behalf. There are a few different programs out there that parents of would-be college-goers can sign up for to get funds to cover tuition. This might be a great idea for you if you are unemployed and are having difficulty getting approval on student loans. If your parents have the means to get the money for you, let them do it if they are willing. You can always offer to help them pay the loan back once you become financially stable. The Parent PLUS loan is one of the most popular of this variety, but there are several others you can check into if PLUS doesn’t pan out.

A Note about Non-Accredited Schools

If you’re planning to attend a college or university that isn’t accredited, you might run into some problems when you try to secure a student loan for your tuition. Unfortunately, many lenders — both government and private — will not offer student loans for non accredited schools.

Keep in mind that it’s occasionally difficult to get student loans for non accredited schools even when you have good credit. Schools that cannot be accredited are not necessarily trusted by the government or lenders who give out student loans. You’ll probably have the best chance of getting loan approval if you apply to a school that has been accredited.

It might be a good idea for you to inquire about student loans at the schools you’ve applied to. Explain your situation — they aren’t accredited and you’re having trouble getting a loan. Ask them if they have any ideas regarding what you can do. There’s a good chance they’ll be able to help. After all, they really want your attendance, and they might have some resources for lenders that will grant student loans for non accredited schools.

Loan Terms Might Vary With Non Accredited Student Loans

If you do manage to secure a student loan for your tuition at a non accredited school, you should keep in mind that your loan terms might not be that great. Most lenders let students wait to repay their loans after they’ve graduated rather than forcing them to try to make payments while they’re in school. Even the best place to get a student loan does not usually come with this same luxury. There’s also a good chance that your interest rate and payments will be slightly higher than if you got a loan to attend an accredited school.

Why Non Accredited Schools Have Bad Reputations

Not all non accredited schools are scams, but many are. The schools that either don’t have or have lost their accreditation for various reasons give other non accredited schools that are perfectly legit a bad name. This is why many lenders and government agencies are reluctant to give out student loans to pay for tuition to any non accredited financial institution. If you’re thinking about going to a non accredited school, do your research first to make sure the place you plan to attend is completely legit and trustworthy. Be especially wary of “diploma mills” which are in place to do nothing more than give you a useless degree and take your money.

F.A.Q.

We’ll add questions from readers here in this section.

Reader Question: Daniel from Wisconsin asks: “Can you file bankruptcy on a student loan?”

You can file bankruptcy on a student loan. However, student loans are NOT usually discharged. According to Chapter 7 Bankruptcy law, you must show that payment of debt will “impose an undue hardship on you and your dependents” for your loan to be discharged. There are several different tests Courts use to evaluate whether or not the borrower has an undue hardship.

Your student loan will only be cancelled if you can successfully prove this hardship. By filing bankruptcy on a student loan, you are also protected from collection actions on your debts until the case can be resolved. Make sure you talk with a lawyer before filing bankruptcy on a student loan. If you cannot prove this hardship, consult a bankruptcy lawyer. Your lawyer knows the law and may be able to provide other alternatives.

If you decide to file for bankruptcy, keep in mind that it will likely have a negative effect on your ability to obtain credit for roughly seven years. It’s quite possible that companies offering cash loans for people with terrible credit will be your only options for obtaining credit after you file. Bad credit loans come with extremely high interest rates, and in all honesty it’s probably best if you avoid them. After a bankruptcy, it’s best to stay away from debt if possible so you can work on improving your credit score.

In the National Postsecondary Student Aid Study (NPSAS) conducted by the U.S. Department of Education, 67% of students graduating from four-year colleges and universities had student loan debt, which represents 1.4 million students graduating with debt. This number has increased 27%, from 1.1 million students in 2004. Student loans for non accredited schools often come with less than desirable loan terms because they are harder to obtain, so it’s not unusual for many students to end up in hot water financially once they begin paying loans like this back. However, financial hardship can result from any type of student loan.

Reader Question: Susan asks: “Is student loan interest tax deductible?“

According to the Internal Revenue Service (IRS), you can deduct interest you paid on a qualified student loan if you meet all requirements, listed below.

• You paid interest on a qualified student loan in tax year 2010
• You are legally obligated to pay interest on a qualified student loan
• Your filing status is not married filing separately
• Your modified adjusted gross income is less than a specified amount which is set annually, and
• You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s return.

You cannot deduct interest if you do not meet all of the above requirements. Additionally, you cannot deduct more than $2,500.

A qualified student loan is a loan you take out to pay for qualified higher education expenses, which must meet three conditions.

• The expenses were for you, your spouse or a person who was your dependent when the loan originated.
• You paid or incurred the expenses within a reasonable period of time before or after you took out the loan.
• The expenses were for education furnished during an academic period when the recipient was an eligible student.

In the adjustments to income section of the 1040 or 1040A form, student loan interest is a tax deduction. You can deduct the interest on the loan even if you do not itemize the loan.

Your university and loan provider are not able to tell you if you qualify for a loan interest tax deduction. For more information, talk with a tax professional, or contact the IRS.