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Best Bad or No Credit Student Loans of 2021
The maximum amount undergraduate students can borrow in federal student loans each year is $12,500. If you’re attending a private college, that will only cover about a third of your annual cost of attendance. If your savings and federal loans fall short, you’ll probably need to apply for private student loans to bridge the gap. Although many private student loans require good credit and a stable income, you may still be able to get a loan with limited income and credit history. Not sure where to look? Browse the list of private student loans for bad credit below, chosen through the SimpleScore methodology by comparing fixed-rate APRs, loan amounts, transparency, perks and fees, to find an option that works for you.
- Ascent
Fixed APR:3.78%–14.75%Fees:5% of past due amountLoan Amount:$1K–$200KEligible Degrees:N/A - Sallie Mae
Fixed APR:4.50%–12.60%Fees:$25 or 5% late feeLoan Amount:Up to 100% of costsEligible Degrees:UndergraduateOffer Details
Sallie Mae Disclosure: 1. This information is for undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United states. Non- U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1000. Currently credit and other eligibility criteria apply. 2. This repayment example is based on a typical Smart Option Student Loan made to a freshman borrower who chooses a fixed rate and the Fixed Repayment Option for a $10,000 loan, with two disbursements, and a 8.51% fixed APR. It works out to 51 payments of $25.00, 179 payments of $124.69 and one payment of $66.91, for a Total Loan Cost of $23,661.42. 3. Although we do not charge you a penalty or fee if you prepay your loan, any prepayment will be applied as provided in your promissory note: first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.
- College Ave
Fixed APR:3.49%–12.99%Fees:$25 or 5% late feeLoan Amount:$1K to 100% of costsEligible Degrees:Undergraduate & GraduateOffer Details
*College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
As certified by your school and less any other financial aid you might receive. Minimum $1,000.
The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
Information advertised valid as of 12/14/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.
- EDvestinU
Fixed APR:2.543%–9.109%Fees:NoneLoan Amount:$1K–$200KEligible Degrees:N/A - Citizens One
Fixed APR:4.25%–11.53%Fees:Late feeLoan Amount:$1K–$150KEligible Degrees:N/A - Discover, Member FDIC
Fixed APR:4.59%–12.99%Fees:NoneLoan Amount:Up to 100% of costsEligible Degrees:UndergraduateOffer Details
1. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans and include a 0.25% interest rate reduction while enrolled in automatic payments.
2. Lowest APRs shown are available for the most creditworthy applicants for undergraduate loans and include a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including Undergraduate. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of January 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.
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The 6 best no credit or bad credit student loans of 2021
- Best for Students with No Cosigner: Ascent
- Best for FICO Monitoring: Sallie Mae
- Best for Choosing Own Payment Terms: College Ave
- Best Nonprofit Lender: EDvestinU
- Best for Multi-Year Approval: Citizens Bank
- Best for No Fees: Discover Bank, Member FDIC
The best no credit or bad credit student loans at a glance
| Lender | Loan Amount | APR | Terms | Key Benefit |
|---|---|---|---|---|
| Ascent | $1,000–$200,000 | 3.78%–14.75% | 5–10 years | No cosigner |
| Sallie Mae | $1,000–100% of costs | 4.50%–12.60% | 6 months–6 years | FICO score monitoring |
| College Ave | $1,000–100% of costs | 3.49%–12.99% | 5–15 years | Customizable payment terms |
| EDvestinU | $1,000–$200,000 | 2.543%–9.109% | 7–15 years | Low interest rate |
| Citizens Bank | $1,000–$150,000 | 4.25%–11.53% | 5–15 years | Multi-year approval |
| Discover Bank | Up to 100% of costs | 4.59%–12.99% | 15 years | No fees |
*Rates accurate as of December 8, 2020, and exclude autopay discounts
Best for no cosigner – Ascent
You can get graduation money from more than just your grandparents — Ascent offers 1% bonuses for college graduates.
Ascent has both cosigned and non-cosigned student loan options. Its cosigned loans have customizable repayment terms and no prepayment penalties, so you can pay off your debt quickly without incurring fees. Its non-cosigned loans may allow you to qualify on your own even if you don’t have much credit history or income. If you’re a college junior or senior, you can apply for a future income-based loan that takes into account your earning potential after graduation.
Ascent also offers unique perks like a 1% cash back bonus for graduating and a referral program that gives you $525 for each friend who takes out a loan. The main downside of Ascent is that its maximum APR is high.
Best for FICO monitoring – Sallie Mae
Start your credit-building journey as a student with Sallie Mae and its FICO credit score monitoring perks.
Sallie Mae offers student loans with flexible repayment options to fit your budget and financial goals. You can choose to make interest-only payments while you’re still in school or wait until after you graduate to start paying back your debt. Additionally, you can get on a graduated repayment plan, which allows you to make interest-only payments for up to a year after you graduate.
Sallie Mae also offers financial tools like college cost calculators and FICO credit score monitoring to help you take ownership of your finances. But if you don’t already have a good credit score, you’ll probably need a cosigner to qualify for its loans.
Best for choosing own payment terms – College Ave
College Ave helps students get on the path to graduation and careers, even offering $150 for students who complete trade school degrees.
College Ave offers student loans with competitive interest rates and customizable repayment options. The lender allows you to start paying interest while you’re still in school and offers flexible repayment terms ranging from five to 15 years, enabling you to pay off your loan quickly to save on interest or slowly to lower your monthly payments.
If you have bad credit, you may have trouble qualifying for a loan from College Ave without a cosigner. You’ll also have to meet strict requirements to be eligible for a cosigner release, like being halfway through your loan term and making 24 consecutive on-time payments.
Best nonprofit lender – EDvestinU
As a nonprofit, EDvestinU invests in education by offering super-low interest rates, so you can spend less on your student loan and more on starting your post-grad life.
EDvestinU offers loans with low rates with autopay and terms from five to 20 years. If you experience economic hardship at any point during your repayment period, you can defer your loan for up to 12 months. You can also make interest-only payments while you’re in school, either on a monthly schedule or whenever you have the extra cash.
The main downside of EDvestinU is that you probably won’t be able to qualify on your own if you have bad credit. You’ll need to get a loan with a cosigner.
Best for multi-year approval – Citizens One
Citizens Bank offers multi-year approval so you don’t have to deal with the hassle of filling out paperwork every year to get the money you need for your education.
Citizens Bank offers competitive interest rates and an easy online application process that takes just 15 minutes to complete. It also offers multi-year approval to eligible borrowers, which allows you to get funds for all four years of college without filling out additional paperwork or undergoing another hard credit check.
Although Citizens Bank requires a strong credit history to apply on your own, you can apply for a no credit student loan with a cosigner.
Best for no fees – Discover, Member FDIC
Discover Bank doesn’t charge unnecessary fees like prepayment penalties just to part you with your cash, but it may not be the best option for borrowers without cosigners.
Discover Bank charges zero fees on its student loans and allows borrowers to get funds for all four years without having to reapply. It also offers competitive rates with a 0.25% autopay discount and cash rewards for students who get good grades.
Discover also has lots of payment assistance options, including temporary interest rate reduction and forbearance.
What is a no credit student loan?
No credit student loans have flexible credit score requirements so students with bad credit or limited credit history can qualify for them. There are two main types of no credit student loans — federal and private. Most federal student loans don’t require a credit check or cosigner, so they’re ideal for students with a thin credit profile.
[ More: Best Student Loans ]
For private student loans with bad credit, lenders usually check your credit score but allow you to add a cosigner to your loan to boost your chances of approval. They may also take into account other factors besides your credit score like your past school performance or future earning potential to determine your eligibility for a loan.
How no credit student loans work
No credit student loans work the same way as any other student loan. Most no credit loans allow you to borrow up to the cost of attendance to finance your whole education, though some have lower limits. Once you get out of school and your grace period ends, you’ll have to start making payments on whatever you borrowed with interest.
You can often choose between a fixed or variable interest rate and pick a payment plan that works for your financial situation. Most loans give you up to 10 years to pay them back, though some may offer longer terms or income-based repayment options.
The application process varies depending on which type of student loan you pick. To apply for federal student loans, you’ll need to fill out a form called the FAFSA. Private student loans each have their own application, which you can find on the lender’s website.
[ Read: A Guide to the FAFSA ]
Adding a cosigner
Most federal student loans don’t have credit score requirements, but private student loans often require good credit. That’s where cosigners come in. A cosigner is someone with good credit and stable income who agrees to pay back your loan if you can’t. Adding someone with solid finances to your application can help you get approved for loans you wouldn’t qualify for otherwise. You may even receive a lower interest rate.
Federal student loans
Another route for students with bad credit or limited credit history is federal student loans. The government offers both subsidized and unsubsidized loans students can qualify for without a cosigner or credit check. Subsidized loans are based on financial need, but any student can get unsubsidized loans. Federal student loans may not cover your full cost of attendance, but they can help you get closer to your goal.
Parent PLUS loans
If your parents are willing to help you with your college costs, Parent PLUS loans may be an option. They’re unsubsidized, credit-based federal loans for parents of dependent college students.
[ Next: Parent PLUS Loans ]
How to start building credit as a college student
Getting the best students loans isn’t easy without a credit history. No-credit student loans exist, but you may be able to receive better rates if you’ve already begun to build a positive credit history. If you don’t want to apply for future student loans with no credit, here are some things you can do starting today:
- Take out a credit card and pay it off each month. You want to keep your card active, but maintaining a zero balance is great for your credit score. Some cards are designed specifically for college students.
- Get utilities in your name. You can also build credit by having your electric bill and/or cable in your own name and paying it on time.
- Keep your student loans current. As soon as you get a student loan, you have an opportunity to build positive credit. Make payments on time and remember that some loans are deferred until graduation and some are not. Always go into an approved forbearance rather than falling behind.
[ See: Will Multiple Credit Cards Hurt My Credit Score? ]
How to improve your bad credit before applying for a student loan
Bad credit is a serious barrier to obtaining any loan, but credit scores are always in flux — and that can be very good news. By following these steps, students and parents can improve their credit worthiness in as little as a few months and receive more appealing loan offers.
- Consolidate debt: If you can consolidate your credit card or other debt into one loan, you may see a credit score increase. There will be a temporary dip because you’re opening a line of new credit. After that, lowering your debt-to-income ratio will help your score.
- Make timely payments: On-time payments are a major aspect of score calculation. Stop missing payments by more than 30 days to start rebuilding credit immediately.
- Prioritize paying off revolving accounts: Installment loans are not judged as harshly as credit cards and other revolving credit. Pay off your cards first, or consolidate them onto one card.
[ More: Best Student Loans ]
Student loan options for parents with bad credit
Parents with a low credit score may have a more difficult time securing a parent loan through a private lender than people with a score over 650. While it’s not impossible to obtain a private loan, getting approval from these lenders tends to hinge on credit history. But all hope is not lost. Student loans for bad credit are available to parents through these alternative options.
- Parent PLUS Loans: These loans are offered by the federal government. While parents will be subject to analysis of their payment history and bankruptcies, there is no debt-to-income requirement and parents with bad credit are more likely to be approved.
- Home equity loans: Parents who own a property may want to consider leveraging their home’s equity to pay for college. With your home as collateral, you may stand a better chance of approval over an unsecured loan.
- College payment plans: Some colleges will allow parents to work out an installment plan for tuition. The repayment terms are relatively short, often just a year, but this may be a viable option if you have some cash on hand but bad credit.
[ Read: Credit and Debt Management ]
How to choose the best no credit student loan for you
- Apply for federal student loans first. Federal student loans often have lower interest rates and more flexible repayment options than private loans. You can also qualify for them without a credit check or cosigner, so it’s best to apply for them first before you consider private loans.
- Figure out how much more you need to borrow. The financial aid you receive from the government and your college may not be enough to cover the full cost of attendance. When you get your award letter, calculate how much more you’ll need to borrow.
- Try to find a cosigner. Because many private student loans require a cosigner, ask your parents and family members if they’d be willing to cosign your loan.
- Consider your private student loan options. If you have a cosigner, research your loan options together. Get prequalified with a few different lenders to see which ones offer the best rates. If you don’t have a cosigner, it may be more difficult to find a loan depending on your financial situation. Look for loans with flexible income and credit score requirements or alternative underwriting standards that consider factors besides your credit score, such as school performance.
Student loan FAQs
Most students ask a parent or family member to be their cosigner, but you can also ask trusted friends who have good credit and stable income.
Most federal student loans don’t require a credit check, so you may be able to get one without a cosigner even if you have bad credit or limited credit history. Some private student loan companies are also willing to work with borrowers who have poor credit and no cosigner, but they often charge higher interest rates.
If you or your parents have savings, you can use them to cover some of your college costs. You can also apply for scholarships and grants from the government and nonprofits. You may even be able to get a work-study job to help you pay for tuition and living expenses.
Too long, didn’t read?
Although it’s harder to get a student loan with bad credit, it’s not impossible. You can improve your chances by applying with private lenders who have more flexible eligibility requirements and alternative underwriting practices as well as those who allow for cosigners. Shop around and compare rates and terms to find the best fit for your needs.
We welcome your feedback on this article and would love to hear about your experience with the student loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.
Keep Reading
Methodology
The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.
For every review, our editorial team:
- Identifies five measurable aspects to compare across each brand
- Determines the rating criteria for each aspect score
- Averages the five aspect scores to produce a single SimpleScore™
Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best student loans of 2020.
Max Fixed Rate
Lenders who offered a lower maximum fixed rate were awarded higher scores.
Perks
We awarded higher scores for lenders that list more perks including services, discounts and special offers for their borrowers.
Transparency
Lenders that laid it all bare by publishing important data about products — APR, offered loan amounts, applicable fees and customer support contact links — scored higher for transparency.
Loan Amount
Lenders that offered higher loan amounts compared to others received higher scores.
Fees
We awarded higher scores to lenders that have fewer loan fees for borrowers.
Reviewed by
Courtney Mihocik
Loans EditorCourtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to Interest.com, PersonalLoans.org, and elsewhere.
