Best Student Loans For Bad Credit Or No Credit in US

If your credit score falls below 670, prioritizing federal student loans is advisable since they don’t necessitate a credit check. Federal loans also offer highly adaptable repayment options, including forgiveness for those in public service or on specific repayment plans.

While individuals lacking a strong credit history or access to a co-signer may qualify for private student loans with a co-signer boasting robust credit and income, options exist that don’t factor credit into their evaluation.

1. Federal Direct Subsidized Loans

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Federal direct subsidized loans stand out as the most advantageous option among undergraduate and graduate student loan choices due to their affordability and flexibility. These loans are exclusively available to undergraduate students who demonstrate financial need through the Free Application for Federal Student Aid (FAFSA). Notably, the government covers the interest accrued while students are in school, during their grace period, and when loans enter deferment.

With some of the lowest interest rates available, subsidized loans require no co-signer and extend the same rate to all eligible undergraduate borrowers, irrespective of their credit history. Importantly, borrowers of federal subsidized loans gain access to income-driven repayment plans, which can reduce the repayment amount, and may qualify for loan forgiveness if they pursue careers in public service fields.

2. Federal Direct Unsubsidized Loan

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Federal direct unsubsidized loans offer attractive fixed interest rates, without being contingent on creditworthiness or requiring a co-signer. These loans extend the same rate to all eligible undergraduate borrowers, regardless of their credit history.

Although private student loans might offer lower interest rates for the most creditworthy borrowers, opting for them means forgoing various consumer protections that federal direct unsubsidized loans provide. Borrowers of federal direct unsubsidized loans have access to income-driven repayment plans, potentially reducing their repayment burden, and may qualify for loan forgiveness by engaging in public service work.

While federal direct unsubsidized loans do carry a small origination fee of 1.057%, which is absent in most private loans, the combination of the low interest rate and loan benefits often outweighs this fee.

3. Ascent Undergraduate Future Income-Based Loan

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Among the student loans offered by Ascent for undergraduates, the Future Income-Based Loan stands out as one of two options that do not necessitate a co-signer. Designed for students lacking credit history or failing to meet income requirements for Ascent’s other co-signer-free loan, the Non-Co-Signed Credit-Based Loan, eligibility and interest rates hinge on factors such as the school attended, educational program, anticipated graduation timeline, GPA, and more.

This loan is exclusively available to college juniors and seniors with a minimum GPA of 2.9. Similar to other Ascent loans, it features no origination fee, a generous 24-month forbearance period, and a graduated repayment plan, allowing for initial low payments that gradually increase while maintaining the original loan term. However, international students must seek an Ascent loan with a U.S. citizen co-signer, rendering them ineligible for a non-co-signed loan.

4. Funding U

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Funding U provides loans without considering credit history and without mandating a co-signer for student borrowers. Eligibility for a loan is determined by factors such as academic standing, work experience, current coursework, anticipated graduation, and future earning potential. However, the company does not offer loans in every state, and its most competitive rates are reserved for college seniors with exceptional academic achievements.

Although Funding U’s loan limits are relatively modest, it’s important to exercise caution with private loans, as they should be utilized sparingly. Ideally, borrowers should aim to minimize reliance on private loans to bridge larger gaps in funding.

5. Prodigy Finance

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For many international students, accessing federal student loans is not an option, often requiring a U.S. citizen co-signer to secure private student loans. Prodigy Finance, headquartered in London, offers private student loans specifically tailored to international master’s students, eliminating the need for a co-signer.

To qualify, students must enroll in an eligible school located in one of the 18 countries where Prodigy Finance operates. Interest rates are variable and determined based on the student’s field of study and future earning potential, with an average rate of 7.3%, as stated by Prodigy Finance. Additionally, borrowers incur a 4% administration fee, which is distributed across their monthly payments.

It’s important to note that Prodigy Finance does not extend its lending services to U.S.-based borrowers residing in certain states, including Alabama, Arkansas, Connecticut, Delaware, Hawaii, Idaho, Indiana, Iowa, Maine, Michigan, Mississippi, Minnesota, Montana, Nevada, New York, North Dakota, Ohio, Rhode Island, South Dakota, Vermont, Washington, West Virginia, or Wyoming.

Read more: Best Student Loans For Bad Credit Or No Credit in US