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Resources > College Support > How To Get College Loans for Parents With Bad Credit—A Complete Guide

How To Get College Loans for Parents With Bad Credit—A Complete Guide

Paying for your child’s college is nearly impossible nowadays unless you have a savings fund or obtain a loan. The cost of tuition at a four-year college rose by 9.24% between 2010 and 2022, and it seems that the increase in education-related prices won’t come to a halt any time soon. 

Paying for a child’s college is even harder for parents with bad credit scores as most college loans require strong credit to qualify. However, college loans for parents with bad credit do exist, and you’ll learn all about their features and requirements in this comprehensive guide.

Is There a Credit Check for College Loans?

The short answer is yes—lenders will check your credit score when you apply for a college loan. This doesn’t necessarily mean that every lender will use your credit score to determine your eligibility, which is why you should familiarize yourself with each lender’s rules and requirements before applying for a loan. To submit your application and find out whether you’re eligible, you’ll need to provide your legal name and Social Security number (SSN).

While both federal and private lenders offer loans to parents, some of them let students apply for loans instead. If your credit score is low, and you’re afraid you won’t be approved for a loan, consider letting your child apply for student aid. College loans for parents with bad credit are prone to high interest rates, so student loans are a great alternative—they’re typically designed for students with low or no credit and are more likely to offer lower interest rates. 

Best Options To Get College Loans for Parents With Bad Credit

If you’re a parent with bad credit, the good news is that federal lenders don’t consider your credit score when you apply for financial aid. Instead, FAFSA eligibility is determined based on the student’s needs rather than their or their parents’ credit score. Once your child applies for financial aid, the FAFSA form you help them fill out will be used to determine if they’re eligible for student loans, work-study programs, grants, or other financial aid options.

There are several options for college loans for parents with bad credit. The most popular ones include:

  1. Direct Subsidized Loans/Direct Unsubsidized Loans
  2. Direct PLUS Loans
  3. Private student loans

Direct Subsidized Loans/Direct Unsubsidized Loans

Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED). Both can help cover the cost of your child’s higher education, whether they choose a four-year college or a trade or technical school. Neither of these loans requires a credit check, but there are a few differences between them:

LoanFeatures
Direct Subsidized LoanThis loan is available for undergraduate students with financial need. The borrowing limit is determined by the school, but it may not be more than the amount your child needs. The interest is covered by ED during enrollment, the grace period, and the deferment period
Direct Unsubsidized LoanThis loan is available for undergraduate and graduate students, but they don’t have to demonstrate financial need when applying. The school decides on the borrowing limit based on the cost of attendance and other financial aid your child may have. The ED doesn’t cover any interest in this case—your family is expected to cover it instead

When it comes to college loans for parents with bad credit, Direct Subsidized Loans have slightly more favorable terms for families with significant financial needs.

Direct PLUS Loan

Direct PLUS Loans are federal student loans that can be obtained by parents of college students or graduate students through separate loans:

  1. Parent PLUS—A loan made to an eligible parent borrower so they can pay for their child’s college education
  2. Grad PLUS—A loan made to a professional or graduate student

These loans require a credit check for both you and your child, but a good credit score isn’t a crucial eligibility factor. It’s important you don’t have any adverse credit history like delinquency or bankruptcy. If you do, you may have to apply with a cosigner, submit documentation to justify the circumstances, or go through PLUS Credit Counseling, which helps students and parents understand their obligations when they obtain a PLUS loan.

Regardless of your credit score, you’ll be offered the same interest rate as all the other borrowers since a bad credit score doesn’t impact the rate.

Private Student Loans

Private lenders like banks, online lenders, and credit unions offer private loans to parents and students. These are usually the last resort to fill the financial gap once you’ve used up all the other options like federal student loans, grants, and scholarships. This is because private lenders have more stringent terms and requirements, one of which may be a high credit score.

The good news is that there are private college loans for parents with bad credit as some private lenders will approve your loan even with a low credit score. However, their interest rates will likely be higher than those of federal student loans. For this reason, it might be best to have your child apply for a loan instead.

There are numerous private student loans designed for students with low credit scores, so they usually don’t have high credit requirements. Still, some of them can ask for a cosigner who’s typically a parent, and they may require the cosigner’s credit check.

The Best Private College Loans for Parents With Bad Credit

When exploring private college loans for parents with bad credit, you’ll mostly find loans for students with low or no credit that may or may not require a cosigner. If you opt for one of these loans, you should look for favorable interest rates and pick the option with repayment terms that meet your needs.

Based on factors like credit requirements, loan amount, and fees, some popular private student loan options include:

  1. Funding U
  2. Ascent Funding
  3. College Ave

Funding U

Funding U offers private student loans to undergraduates without a cosigner. This loan has fixed interest rates and no prepayment penalties. The loan amount is limited to $20,000 per school year, and you must repay the loan in up to ten years.

To approve your child’s application, the lender relies on factors like the class hours they completed, the school’s graduation rate, and their academic record and major, among other criteria. While they may look at the credit history to check if any payments were missed, they won’t use the credit score as a determining factor for loan approval.

Ascent Funding

Ascent Funding offers two types of student loans—one without a cosigner and one with a cosigner. The one with no cosigner doesn’t require a credit history check, and it’s only available to juniors and seniors. The cosigned loan, however, requires the cosigner to have a minimum credit score (the exact number isn’t stated).

This loan stands out with its long grace period of nine to thirty-six months instead of the usual six months offered by other lenders. Still, the grace period depends on whether your child is a graduate, undergraduate, medical student, or dental school student.

The loan amount limit is up to $200,000 for undergraduate loans or $400,000 for graduate loans. There are no repayment fees, and you can get a 1% rate discount if you sign up for autopay.

College Ave

College Ave lets students with a limited or low credit score apply for a loan with a cosigner, but the cosigner’s credit score must be over 600. According to the College Ave website, 95% of students who apply get approved for their multi-year loans, and there are no application or prepayment fees.

These loans are designed for parents, graduates, and undergraduates. The upper limit on the loan amount your child can receive depends on the cost of attendance, while the lowest loan amount is $1,000.

How To Pay for College When Parents Have Bad Credit—Additional Options

If no college loan meets your needs or you get denied a loan because your credit score is bad, there are still additional options you can consider. Instead of searching for a lender that doesn’t consider your credit history for loan approval, you can increase your chances of securing the funds for your child’s college if you:

  1. Apply with a cosigner
  2. Research grants and scholarships
  3. Boost your credit score
  4. Build strong credit for your child

Apply With a Cosigner

If you don’t qualify for a college loan on your own, find a creditworthy cosigner who will agree to take on the responsibility with you. That way, you’re more likely to get approved for the loan and receive low interest rates.

This may be a family member or a close friend whose good credit score can instill confidence in the lender that the loan will be repaid. The cosigner is legally tied to repaying the loan if you don’t do so, and missing a payment can negatively affect their credit score.

Research Grants and Scholarships

If your child doesn’t get financial aid through the FAFSA, research non-federal grants and scholarships before applying for any loans.

There are numerous scholarships available to help cover your child’s college expenses, including: 

  • Need-based scholarships
  • Athletic scholarships
  • Merit scholarships

You can find all the information you need on various scholarship websites, and your child can apply for as many scholarships as they like to increase their chances of getting one. 

Grants are also a great option—they’re offered to students based on financial need as the only factor considered to get approved for a grant.

Boost Your Credit Score

Although it may not be easy, you can improve a bad credit score. If you don’t need a college loan right away, you can use the remaining time until your child goes to college to work on boosting your credit. You can do so by:

  • Reviewing your credit report—A mistake on your credit report can harm your credit score, so check if your report is accurate. If you find a mistake, you can report it to the credit bureau that issued the report. Once the bureau investigates the mistakes and confirms that it’s an error, it will be removed from your credit report
  • Paying off debt—If you’re late on a payment, prioritize paying it off to boost your credit score. Potential lenders are more likely to believe you’ll pay off their loan and approve it if you’re not in debt
  • Lowering credit utilization—Your credit utilization measures how much of your total card limit you’re spending monthly, so try keeping your debt-to-credit ratio under 30%

Build Strong Credit for Your Child

Building credit isn’t something people give much thought to until it’s time to obtain a loan, but strong credit is crucial for loan approval. If your child manages to build good credit by the time they go to college, they’ll have an easier time obtaining student loans.

Still, the problem many parents face when considering building their child’s credit is that children alone have no access to credit cards before they turn 21 due to the restrictions imposed by the CARD Act of 2009. Fortunately, FreeKick provides a solution to this limitation through parent-sponsored credit building, which helps you build a strong credit profile for your child starting as early as the age of 13.

FreeKick—The Best Solution for Credit Building and ID Protection

FreeKick is an FDIC-insured deposit account provided by Austin Capital Bank that provides support in building credit for young adults and minors aged 13 to 25. It also includes identity protection and monitoring services for you and your whole family, covering up to two adults and six children between the ages of 0 and 25.

Parent-Sponsored Credit Building With FreeKick

The earlier you start your child’s credit building journey, the stronger their credit score will be by the time they go to college. What’s more, if your child manages to establish a strong credit profile from a young age, they can save more than $200,000 during their lifetime. 

FreeKick helps your child build credit from the age of 13 through parent-sponsored credit building. Here’s how to get started:

  1. Create an Account—Visit FreeKick.bank and choose a plan that fits your family’s needs and budget
  2. Set It and Forget It—After the account is activated, FreeKick automatically starts building your child’s credit over the next 12-month period through a no-interest installment loan
  3. Keep Growing—Once the 12-month period passes, you have the option to renew the account and keep building your child’s credit or close it and get a 100% refund of your deposit

Comprehensive Identity Protection With FreeKick

A child’s identity is stolen every 30 seconds, and college-aged children are uniquely vulnerable to this crime.

College students are frequent targets of identity thieves due to their lack of awareness and high reliance on digital platforms. For this reason, FreeKick offers comprehensive security features for protecting both adults and minor children:

Services for Adult Children and ParentsServices for Minor Children
Credit profile monitoring
SSN monitoring
Dark web monitoring for personal information
Up to $1 million identity theft insurance
Full-service white-glove concierge credit restoration
Lost wallet protection
Court records monitoring
Change of address monitoring
Non-credit (Payday) loan monitoring
Free FICO® Score monthly
FICO® Score factors
Experian credit report monthly
Credit profile monitoring
SSN monitoring
Dark web monitoring for children’s personal information
Up to $1 million identity theft insurance
Full-service white-glove concierge credit restoration
Sex offender monitoring—based on sponsor parent’s address

FreeKick Pricing

FreeKick offers two different plans to fit every family’s budget. Both plans include identity protection services and FDIC insurance up to $250,000. Find the details in the table below:

FDIC-Insured Deposit AmountPlan Fee
$3,000$0 (Free)
No deposit$149/year

Secure your child’s financial future by starting their credit building journey early and protect your whole family from identity theft—sign up for FreeKick today.