Student Loans for Bad Credit

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Bad credit should not keep you from earning your degree and securing the job you want. Federal options through the Department of Education allow you to take out a loan with flexible repayment plans without reference to your credit score. However, there are limits to how much a student can take out, and for what purpose, so you may need to consider a private loan to fill in the gaps. This guide will help you every step of the way.


What This Article Covers

  • What does a student loan for bad credit look like?
  • Credit score and requirements
  • Federal student loans vs. private
  • Pros and cons for low credit borrowers
  • Checklist before you apply
  • How to apply
  • Other tips for when you apply
  • FAQ

What Does a Student Loan for Bad Credit Look Like?

A student loan for bad credit is generally one required by an individual with a credit score less than 690. It is not a specific type of loan, but a subset. Credit score requirements for student loans will vary by provider. Basic federal loans do not account for a credit score, and there are some more flexible private options available as well.

First Things First

Submit your FAFSA if you have not already done so for this year. This will show you what kind of financial aid you qualify for based on your demonstrable financial needs. From there you can better determine how much and what type of loan you will really require.

Types of Student Loans for Bad Credit

Government student loans - Apply with the federal government

All students who need financial assistance to attend post-secondary school should apply, as the most favorable terms tend to be with federal loans. No credit score is required to qualify. These loans cover a range of degrees, but carry parameters such as financial need (particularly in the case of subsidized loans) and payout limits.

Private student loans - Apply with a bank or other lender

Private loans have the most flexible payout, but often require a credit check. There are options for students with bad credit and no credit which we will outline below. If your credit is poor, one of the easiest ways to secure a better rate is with a co-signer. There are plenty of lenders that will work with you to find the best rate.

Other student loans - Apply with the state or university

There are also loans specific to states, as well as colleges and universities (sometimes called “institutional” loans). These often have terms similar to private loans and can require a credit check. Do your research to see what your state and school have to offer.

Next, we will break down the federal and private options so you can compare the benefits and drawbacks of various loans as it relates to your credit score.

Loan Type

Min. Credit




Details Pros Cons
Direct Subsidized Loans NO CREDIT REQUIRED Fixed Need-based. Designed for undergrads and low-income students. Fixed, low rate with flexible repayment. Subsidized = no interest while you are in school. Not an option for continuing education. Not available for graduate students.
Direct Unsubsidized Loans NO CREDIT REQUIRED Fixed Designed for undergrad and graduate studies. Fixed, low rate with flexible repayment. Available for undergraduate and graduate students. Unsubsidized = interest accrues right away and is not covered by the government.
Direct PLUS Loans NO MIN, but credit check is required. Negative line items must be addressed. Fixed For graduate and professional students and parents of undergrads. For costs not covered by other financial aid. Fixed-rate with flexible repayment. Covers costs beyond other loan programs. Credit check lets you borrow more. Higher interest rates. Interest accrues right away and not covered by the government.

For whatever is not covered by a federal option, consider a private loan. Here is the breakdown of benefits and drawbacks for those with a low credit score.

Loan Type Min. Credit Score Interest Rate Details Pros Cons
No Minimum Credit NO MIN Fixed or Variable Covers various college costs beyond the government options. No mandated maximum payout. Co-signers can help secure a better APR. Flexible options to secure funds not covered by government loans. Higher interest rates without co-signer.
Minimum Credit Loan +/-540 Fixed or Variable Covers college costs beyond the government options. No mandated maximum payout. Co-signers can help secure a better APR. More competitive interest rates than a no credit loan. Helps cover costs beyond federal loans. Higher credit score required for a better interest rate.

Student Loan for Bad Credit Application Checklist

  • Make sure you are enrolled in your school
  • Secure a co-signer (if applicable) and a personal reference
  • Personal information including SS number and address
  • Financial information including tax returns, assets, annual income(s), employment information, and recent pay stubs

If you are still unsure what to choose, here are some helpful tips and FAQs to prepare you to confidently secure the right loan.

Tips for Before/During the Loan Application Process

  • Research how much you can cover with scholarships and grants before you take out any other student loan.
  • Look at origination fees and other costs for various options.
  • A co-signer makes it much easier to secure a great rate, so consider the benefits and drawbacks.
  • Make sure you compare rates with multiple lenders and terms before you commit to the loan. Here you can compare rates from these top student loan providers **provide link**.


Q: Will a low credit score impact a federally-backed loan?
A: A low score does not directly affect whether or not you get approved.

Q: It seems like the federal loans offer the most benefits, why bother with private loans?
A: There is a cap to how much the basic government programs offer. Private loans help you manage the difference, and there are options for students with low credit scores.

Q: How important is a fixed vs. variable interest rate?
A: The benefit of a fixed rate is that you are committed to a rate that will not change over the life of the loan. A variable rate may offer an appealing starting point, but come with a cost down the line, so weigh your options thoughtfully.


Even if your credit is less than ideal, a college degree is still within reach. Unlike many types of loans, there are plenty of options available through the federal program and other avenues. Use this guide to make sure you secure everything you need.