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How You Can Apply For Student Loans With No Credit
25 Jan 2018

Requesting Student Loans With No Credit – What You Need to Know

College is expensive and paying for it on your own is a good way to burn out before you graduate.

For many students, student loans are the only way to afford tuition and cost of living. But not all student loans are made equal — and choosing the wrong student loan can haunt you for years.

If you don’t have credit, you’re already aware of how difficult it can be to borrow money.

Fortunately, finding student loans with no credit history isn’t quite as difficult as other types of borrowing.

Unlike credit cards or personal loans, some student loans don’t require an invasive credit check. And even when they do, having no credit won’t always disqualify you.

Being money conscious is essential for leaving college in one piece, but money consciousness should never prevent you from going to college at all.

That’s why we’ve put together this guide to show you how to get students loans even when your credit is less-than-stellar or worse — non-existent.

When In Doubt — Ask the Government

Whether you’ve got bad credit or no credit, your first port of call should always be the federal government.

Why?

Because if you’re looking for student loans with no credit, you’re also likely to qualify for some, if not a lot, of financial aid. Financial aid is money that you don’t need to pay back – and you should always prioritize non-repayable financial aid and other scholarships over borrowing money.

That said, financial aid rarely covers all your expenses in today’s education climate. Plus, there are expenses you can’t pay for with federal financial aid.

Never fear — the government also offers student loans with no credit check.

Both the Stafford and Perkins loans are available for students with no or bad credit.

In fact, decisions regarding these loans are made without any regard to your credit history.

Student Loans with No Credit Check — Stafford Loans

Need-Based: Yes

Eligibility: Undergraduate and graduate

Grace Period: 6 months after graduation

Limits: $5,500 for subsidized at undergraduate; maximum unsubsidized loan dependent on year in school and whether student is a dependent

Stafford loans are provided to students who have financial need for aid and are available for both undergraduate and graduate students.

These loans are provided from the federal government, usually via another lender like a bank or credit union, and come with favorable terms like a repayment period of 10-25 years and a 6 month grace period after you graduate.

There are two kinds of Stafford loans:

  1. Subsidized Stafford Loans
  2. Unsubsidized Stafford Loans

A subsidized Stafford loan doesn’t require a credit check and is instead awarded based on your need. This makes it an ideal loan for someone without a credit history.

As an added bonus, you the borrower don’t pay interest that accrues on a subsidized Stafford loan. It’s subsidized because the government pays the interest accrued on your behalf.

Unsubsidized Stafford loans are available to everyone regardless of you or your parent’s income. However, you will pay for the interest that accrues after your repayments begin.

Student Loans with No Credit Check — Perkins Loans

Need-Based: Yes

Eligibility: Undergraduate and graduate

Grace Period: 9 months after graduation

Limits: $5,550 per year for undergraduates and $60,000 total for graduates

A Perkins loan is available for undergraduate and graduate students who demonstrate financial need for federal funds.

One of the best things about the Federal Perkins loan is its interest rate — you’ll only pay 5% on the balance after you graduate or leave school. This rate is significantly lower than the rates offered by some private lenders.

The difference between a Perkins loan and other types of federal and private loans is that while the money is put up by the government, your school also contributes it.

When it comes time to pay back the loan, you’ll owe money to the school — not a lender or the federal government.

Additionally, you’ll get a longer grace period with the Perkins loan — an extra three months after graduation – giving you nine months to find full-time employment or return to college.

Remember, the Perkins loan is a need-based loan and you may or may not qualify. Additionally, the government notes that not everyone who qualifies for a Perkins loan will receive one. It never hurts to request, but you shouldn’t rely exclusively on this loan.

What If My Government Loans Don’t Cover My Tuition?

Unfortunately, subsidized and unsubsidized students loans with no credit check aren’t always enough.

The best option for students who need to borrow is to max out the available student loans with no credit check before turning to other options.

If there are still costs to cover, then you’ll need to turn to credit-based student loans.

There are two options for credit-based student loans: direct PLUS loans or loans from private lenders.

Federal Direct PLUS Loans

Need-Based: No

Eligibility: Undergraduate and graduate

Grace Period: 6 months after graduation

Limits: No limit — may not borrow more than the cost of education

Choosing the federal government as your lender is still a good idea because these loans are backed by the government and offer more forgiveness than private lenders.

If you’ve maxed out your non-credit-based loans and still need more cash, you can try the Federal PLUS Loans.

These loans are designed for graduate students or for parents who are borrowing to pay for their dependent’s education.

Federal PLUS loans are designed to help pay for education, but they make the most of the mature person who is requesting for them.

A credit check is required to qualify for these loans, but it’s not a harsh assessment. As long as you don’t have “adverse credit history”, you’ll be approved for the loan.

Adverse Credit History — Why You Might Still Qualify for PLUS Loans

“Adverse credit history” is the standard used by the U.S. Department of Education for evaluating customers for PLUS loans.

You’re considered to have an adverse credit history if you’ve experienced one of the following:

  • You’re 90 days behind on one or more debts with a balance of over $2,085
  • In the last five years, you’ve been subject to
    • Bankruptcy
    • Default
    • Foreclosure
    • Tax lien
    • Repossession
    • Wage garnishment
  • One of your debts was placed in collections in the last two years.

Adverse credit reflects poor credit history, but having no credit history isn’t counted against you.

This is an important distinction because if you’ve never had debt, then you won’t have ever been behind on your debt.

Using adverse credit history as a marker sets these loans apart from private lenders because private lenders may treat no credit the same way they treat adverse credit.

Even still, having adverse credit doesn’t mean you won’t qualify for the loan. The Department of Education may still approve you if you go through its PLUS Credit Counseling and either appeal the decision or request with a co-signer.

Private Student Loans

Need-Based: No

Eligibility: Undergraduate and graduate

Grace Period: Variable but typically no grace period

Limits: Based on credit-worthiness

The final lending option available is private loans.

Private loans aren’t as popular as federal loans, and moreover, it’s estimated that many people who take private loans aren’t aware that they have other options.

Ultimately, private student loans come without many of the benefits offered by federal loans. There are no mandatory borrower protections that allow you to forbear or defer payments even after a grace period. You also won’t get to pay according to your income.

Instead, these protections vary depending on the lender and the loan. It may come down to your credit-worthiness, and if you don’t have a credit history, you aren’t likely to be offered variable terms.

If you’re unable to make ends meet with your federal loans, it’s better to talk to your school about your financial aid package before requesting a private loan. Not only will the request put a ding on your credit score, but your school is more likely to help you than a lender.

Is there any reason to take a private student loan?

Only if your credit score is excellent and you can competitively price the loans against each other to find the most preferred terms.

Non-Traditional Lenders

You’re unlikely to qualify for a loan with a traditional lender like Wells Fargo or Bank of America or even your local credit union. But if you need to make up the difference, you can talk to non-traditional lenders.

Non-traditional lenders offer student loans with no credit history or even to those with bad credit history.

A credit check is required, but non-traditional lenders may be more flexible with repayment options.

The Breakdown: Top 4 Student Loans with No Credit

We’ve thrown a lot of information your way, and we know it’s confusing. So, let’s break down the best student loans with no credit history in order according to how easy they are to get.

1. Stafford Loans

Stafford loans are the easiest student loans to get because they allow you to get student loans with no credit check.

The best loans to get are Stafford subsidized loans because you’ll pay less in interest. But you can replenish them with Stafford unsubsidized loans, too.

These are the most favorable loans and the easiest to get. Always start here.

2. Perkins Loans

Perkins loans are one of the best loans available because they’re more forgiving and offer low interest rates. But they’re second on our list because they’re harder to get.

Being need-based and coming from a set pool of funding, you may not be awarded a Perkins loan even if you qualify.

Limited availability is a problem, but it should not stop you from trying. These loans are as good, if not better than, Stafford loans, they’re just harder to come by.

Don’t forget to request Perkins loans when you request Stafford loans.

3. Federal PLUS Loans

Federal PLUS loans require a credit check, but they’re forgiving of no credit customers and even in some adverse credit customers. Additionally, your credit score doesn’t affect the interest rate offered to you, which sets it apart from private loans.

These are the loans you should choose if your Stafford and Perkins loans don’t cover all of your expenses.

Remember, even if you don’t qualify, you can still request with a co-signer if you have one available.

4. Private Student Loans

Private student loans are the most difficult loans to come by and if you have no credit history, it is unlikely you will qualify for one.

In order to be approved, a private lender will look for a stellar credit score and a full-time income. Moreover, your interest rate is based on your credit score.

If you’re looking for student loans with no credit check, these aren’t likely the right loan for you. Rather, they’re for people who would do more than qualify: private student loans best suit those who would be offered an interest rate comparable to if not better than the rates offered with federal loans.

Never Use These Products to Pay for School

We’ve covered the best student loans with no credit check, but some of you may still be wondering — can I use my existing financial products to pay for school?

We get it — the student loans with no credit check come with limits. You might be tempted to make up the difference with your existing credit card.

But whether you’ve got a starter credit card or one with a high limit, using your credit card to pay for school is always a bad idea.

Credit card interest rates are often 3x higher than the average student loan rate.

You may make a difference in the short run, but soon you’ll have a monthly payment that is astronomical and you could pay as much as 20 percent more tuition as a result of the interest rates.

Then, you’ll need to struggle to lower your credit card payment, which is possible but may also only put you further behind.

Max out your federal student loan first — then look for other options.

You Can Get Student Loans with No Credit History

You don’t need perfect or even any credit to qualify for student loans with no credit check.

But just because a credit isn’t required doesn’t mean you can take on loans carelessly. In fact, student loans are a great way to build your credit over time and begin to qualify for better financial products.

Have you figured out what you qualify for with FAFSA yet? Will you struggle to make ends meet even with your federal loan allowance?

If you’re a student looking for some extra cash but don’t want to end up in an even worse financial situation, contact Bonsai Finance.

We provide student loans with no credit check to students just like you to help them complete their education while still living their life.