The Bankrate guide to choosing the right student loan with bad or no credit
When shopping for student loans, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of Dec. 8, 2023. Check the lenders’ websites for any updates. The top lenders listed below are selected based on factors such as student loan interest rates, loan amounts, fees, credit requirements and broad availability.
Compare bad- or no-credit student loan rates in March 2024
LENDER | CURRENT APR RANGE | LOAN TERMS | MIN. LOAN AMOUNT | MAX. LOAN AMOUNT | BEST FOR |
---|---|---|---|---|---|
Federal student loans | 5.50%-8.05% fixed | 10 to 25 years | None | $7,500 annually for dependent undergraduates, $12,500 annually for independent undergraduates and 100% total cost of attendance for graduate students | Overall student loans |
Ascent | Fixed: 4.09%-15.71%; Variable: 6.16%-16.09% | 5 to 20 years | $2,001* | $400,000 | Academic achievers |
Funding U | Fixed: 7.49%-12.99% with autopay | 10 years | $3,001 | $20,000 | Undergraduate borrowers |
*The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.
Best overall
Federal Student Loans
Rating: 4.6 stars out of 54.6Info
on Bankrate
- Min. credit score:
- Not disclosed
- Fixed APR From:
- 6.54%–7.54%
- Loan amount:
- $1,000– $500,000
- Term lengths:
- 10 to 25 years
- Min. annual income:
- Not disclosed
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 several repayment options. Graduate students may borrow up to their full cost of attendance in grad PLUS loans, while Direct Subsidized and Unsubsidized Loans have borrowing caps for graduate and undergraduate students.
Why federal student loans are best overall: Federal student loans are available to every borrower, regardless of creditworthiness or financial health. Plus, each type of federal loan offers the same interest rate to all borrowers, so you'll know your rate before applying.
Pros
- Federal deferment and forbearance options.
- Access to income-driven repayment plans and loan forgiveness.
- No minimum credit score requirement.
Cons
- Loan amount caps for undergraduates.
- Origination fees for all loans.
- Rates may be higher than private lenders' lowest advertised rates.
Requirements: To qualify for federal student loans, borrowers must be a U.S. citizen or eligible noncitizen and have a valid Social Security number, with some exceptions. While in school, borrowers must be enrolled at least half time and maintain satisfactory academic progress. Applicants must fill out the FAFSA, and some borrowers must go through a credit check.
Fees: For the 2022-23 school year, loans have an origination fee of either 1.057 percent or 4.228 percent, depending on the type of loan.
Best for Academic Achievers
Ascent
Rating: 4.5 stars out of 54.5Info
Check rate with Credible
- Min. credit score:
- Not disclosed
- Fixed APR From:
- 4.09%–15.71%
- Loan amount:
- $2,001– $400,000
- Term lengths:
- 5 to 20 years
- Min. annual income:
- Not disclosed
Overview: Among Ascent's student loan options is a unique non-co-signed student loan for college juniors and seniors. Your school, program, academic performance and other factors factor into your eligibility. 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. Borrowers can also apply for undergraduate and graduate loans with a co-signer, which opens up lower rates.
Why Ascent is best for borrowers without a co-signer: Ascent is one of only a few lenders with a loan option that approves borrowers based on factors other than credit score, so you may not need a co-signer.
Pros
- Cash back reward upon graduation.
- Autopay discount of up to 1 percent.
- Outcomes-based loan option.
Cons
- Loan amount cap of $200,000.
- High interest rates for outcomes-based loans.
- Undisclosed credit requirements.
Requirements: Borrowers must be at least the age of majority and either U.S. citizens, permanent residents or DACA recipients. Borrowers must be enrolled at least half time for most loans. Some loans require a minimum annual income of $24,000 and at least two years of credit history. Some non-co-signed loans require a GPA of at least 3.0.
Fees: Ascent doesn't charge any fees.
Best for Undergraduate Borrowers
Funding U
Rating: 3.5 stars out of 53.5Info
- Min. credit score:
- Not disclosed
- Fixed APR From:
- 7.49%–12.99%
- Loan amount:
- $2,001– $400,000
- Term lengths:
- 10 to 10 years
- Min. annual income:
- Not disclosed
Overview: Funding U does not use credit scores to make lending decisions. Instead, it considers borrowers' academic achievements, career path and GPA. This makes it a great option for borrowers who lack a credit history and a co-signer. While Funding U does limit loan amounts to $20,000 a year, it's worth considering for undergraduates who need extra funds after using up their federal loan allotment.
Why Funding U is best for undergraduate borrowers: Funding U lends only to undergraduate students, and it's one of the only lenders that accepts undergraduates without a co-signer. Even first-year students are eligible to apply; in this case, lending decisions will be made on high school academics.
Pros
- Co-signers not required or accepted.
- Lending decisions based on academics.
- $100 gift card upon graduation.
Cons
- High starting interest rates.
- Relatively low annual loan amounts.
- Available to residents of only 38 states.
Requirements: To qualify for a Funding U student loan, borrowers must be U.S. citizens, permanent residents or DACA recipients and be at least 18 years old. Borrowers must also be enrolled full time in a bachelor's degree program at a four-year, not-for-profit college. While Funding U bases its eligibility on the student's GPA and academics, as well as the school's graduation rate, it will look at borrowers' credit history for late payments, collections and other negative items.
Fees: Funding U does not charge any fees.
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 turn to income share agreements.
Income share agreements (ISAs) give you money for school, then accept a percentage of your monthly income as payment. When you sign up for an income share agreement, you'll likely receive the following terms:
- The percentage of your income you'll owe.
- The minimum and maximum amount you'll be required to pay monthly.
- Your repayment term.
Income share agreements can benefit borrowers with bad credit since most agreements don't come with strict credit requirements and high interest rates.However, income share agreement payment amounts change based on income. If your income increases or you end up in a high-paying job, you may have to pay 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. Borrowers make 60 to 84 months of payments and 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.
Pros:
- No co-signer required.
- Payments deferred upon job loss.
- No minimum credit score.
Cons:
- Does not disclose payment structure.
- Relatively low loan maximum of $25,000.
- Few direct customer service options.
Eligibility: Edly doesn't disclose many of its eligibility requirements; it says only that it will check your school and major. While there are no minimum credit score requirements, Edly will check for any adverse credit history. Borrowers with late payments or collections in their credit history may have a harder time being approved.
Stride Funding: Best income share agreement for career resources
Overview: Stride Funding's income share agreements have transparent eligibility requirements and a plethora of online resources. Plus, borrowers only need to make up to 60 payments unless they reach the defined payment cap.
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.
Pros:
- Robust online resources.
- Clear eligibility criteria.
- Maximum repayment period of 10 years.
Cons:
- Does not disclose income share percentage.
- Relatively short grace period of three months after graduation.
- Funding limited to $25,000 per year.
Eligibility: Stride evaluates your future ability to repay the loan. It does not have a minimum credit score but may not approve borrowers with an adverse credit history, such as a history of default or collections. Borrowers must be U.S. citizens or permanent residents attending a Title IV college or university at least half time. They must be within two years of graduation. Associate degrees are not eligible. Stride also requires a GPA of at least 2.9. Stride income share agreements aren't available in Alabama, Colorado, Iowa, South Carolina and Washington.
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. Borrowers in this position should first consider federal student loans before turning to private loans for a number of reasons. For one, they're easier to qualify for and most don't consider your credit. Plus, the interest rates are the same for all borrowers — regardless of financial health.
If you need to borrow private loans after maximizing your federal potential, look for lenders that have lower credit score requirements, take other eligibility requirements into account or let you add a co-signer to your loan.
Federal vs. private student loans
Those with poor credit can choose between federal and private student loans, but it's recommended that borrowers turn to federal loans first. The Department of Education sets one fixed rate for all federal borrowers, regardless of financial history and credit score.
Plus, they come with payment protections and forgiveness benefits that private lenders don't offer. For example, graduates who work in a public service position for 10 years may be eligible for Public Service Loan Forgiveness.
After applying for federal aid, borrowers can then explore other financing options to fill any funding gaps. Offered by banks, credit unions and online lenders, private student loans often don't come with borrowing caps, but do 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:
PRIVATE STUDENT LOANS | FEDERAL STUDENT LOANS | |
---|---|---|
Maximum loan amount | Depends on lender (may be up to 100% total cost of attendance) | $7,500 annually for dependent undergraduates, $12,500 annually for independent undergraduates and 100% total cost of attendance for graduates |
Interest rates | 4.50% to 16.99%; may be fixed or variable | 5.50% to 8.05% fixed for 2023-24 |
Fees | Varies by lender; often no fees | Origination fee of 1.057% to 4.228% |
Benefits | High loan limits, low interest rates, the choice between fixed and variable rates | Access to income-driven repayment plans, long deferments and forbearances, no credit check required for most loans |
Drawbacks | High rates for bad credit, limited forbearance options, no federal benefits | Lower loan limits, limited repayment terms |
Qualification requirements | Depends on lender; often requires good credit or a creditworthy co-signer | Meet basic eligibility criteria |
What to know about the FAFSA
Borrowers who are interested in taking out federal student loans must fill out the FAFSA every year. This form asks for information about your finances and your family's finances, but completing it won't affect your credit.
For each FAFSA cycle, the application opens on Oct. 1 prior to the award year and closes on June 30 of the award year. For 2023-24, the FAFSA opened on Oct. 1, 2022, and will close on June 30, 2024. However, deadlines vary by state and college. In some circ*mstances, you can make corrections after submitting the application.
Only U.S. citizens and eligible noncitizens may receive federal student loans through the FAFSA. DACA students may submit the application, but their aid is limited to state and institutional scholarships and grants.
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. Therefore, delinquent payments will negatively 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.
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, as most don't require a credit check. The one exception is Direct PLUS Loans, which look for an adverse credit history but don't set a minimum credit score for approval.
With private student loans, whether or not you can get approved without a co-signer depends on the lender. Some have more flexible eligibility requirements, while others offer loans designed for borrowers without co-signers. These unique loans may use your academic performance or future earning potential to determine your eligibility and rates.
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 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.
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 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. Parents with adverse credit history may add an endorser to the loan, who essentially serves as a co-signer.
Parents can also look into private student loans, especially seeing as many lenders have student loans designed for parents. These loans may 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. If you go this route, look for lenders that accept borrowers with poor credit or 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.
Frequently asked questions
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 flexible eligibility requirements and low rates.