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.

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

The best no credit or bad credit student loans at a glance

Best for no cosigner – Ascent

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You can get graduation money from more than just your grandparents — Ascent offers 1% bonuses for college graduates.

Fixed APR

3.85%–12.94%

Variable APR

5.42%–14.50%

Loan Amount

$1K–$200K

SimpleScore

3.6 / 5.0

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SimpleScore Ascent 3.6

Rates 2

Perks 5

Transparency 4

Loan Amount 3

Fees 4

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

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Start your credit-building journey as a student with Sallie Mae and its FICO credit score monitoring perks.

Fixed APR

4.25%–12.60%*

Variable APR

1.13%–11.23%*

Loan Amount

100% of the costs of attendance

SimpleScore

4 / 5.0

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SimpleScore Sallie Mae 4

Rates 3

Perks 5

Transparency 4

Loan Amount 5

Fees 3

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.

Sallie Mae Disclosure

Repayment Options: Deferred, $25 Fixed ² , or Interest Repayment during school ¹

1 Lowest rates shown include auto debit discount. Advertised rates are for the Smart Option Student Loan for undergraduate students and are valid as of 7/1/2021.
Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. Payments may be required during the grace/ separation period depending on the repayment option selected. Variable rates may increase over the life of the loan. Advertised variable rates reflect the starting range of rates and may vary outside of that range over the life of the loan. Advertised APRs assume a $10,000 loan to a freshman with no other Sallie Mae loans. The borrower or cosigner must enroll in auto debit through Sallie Mae to receive a 0.25 percentage point interest rate reduction benefit. This benefit applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment, if available for the loan.

2 Examples of typical transactions for a $10,000 Smart Option Student Loan With the most common variable rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year In-school period, it works out to a 6.88% APR, 51 payments of $25 00, 119 payments of $136.17 and one payment of $112.58, for a Total Loan Cost of $17,591.81. For a borrower with $20,000 In prior loans and a 2-year In-school period, it works out to a 7.06% APR, 27 payments of $25.00, 179 payments of $98.17 and one payment of $66.85 for a total loan cost of $18,314.28. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 year. Variable rates may increase over the life of the loan.

Best for choosing own payment terms – College Ave

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College Ave helps students get on the path to graduation and careers, even offering $150 for students who complete trade school degrees.

Fixed APR

3.24%–12.99%

Variable APR

1.04%–11.98%

Loan Amount

100% of the certified costs of attendance

SimpleScore

3.8 / 5.0

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SimpleScore College Ave 3.8

Max Fixed APR 2

Perks 4

Transparency 4

Loan Amount 5

Fees 4

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.

College Ave Disclosure

*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. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. 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. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Information advertised valid as of 7/22/2021. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

Best nonprofit lender – EDvestinU

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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.

Fixed APR

N/A

Variable APR

1.993%–8.609%

Loan Amount

$1K–$200K

SimpleScore

4 / 5.0

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SimpleScore EDvestinU 4

Max Fixed APR 4

Perks 4

Transparency 4

Loan Amount 3

Fees 5

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

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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.

Fixed APR

4.18%–10.83%

Variable APR

1.15%–10.24%

Loan Amount

$1K–$150K

SimpleScore

3 / 5.0

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SimpleScore Citizens One 3

Max Fixed APR 3

Perks 3

Transparency 4

Loan Amount 1

Fees 4

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.

Citizens One Disclosure

Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month.As of June 1, 2021, the one-month LIBOR rate is 0.09%.Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

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.

1. 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.
2. 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.
3. 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.

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.