So, your kid is going to college? That’s great! Yet, as great as it is, you are a little worried. How are you going to afford the college tuition? Or the living expenses? You want to take out a loan. If you have bad credit, this process can be more difficult. However, there are many student loans for parents with bad credit.
Here is everything you need to know about student loans for parents with bad credit.
Look to Parent PLUS Loans First
The first thing you’ll want to look at is a Parent PLUS Loan. Since it’s a federal student loan, it’ll have greater benefits and be easier to qualify for. Also, the maximum loan amount you can get is the full cost of attendance minus financial aid. Federal loan interest rates also won’t change regardless of your credit score.
However, Parent PLUS Loans do tend to have higher interest rates than even some private loans. So, before you sign off on one, compare the loan with the pre-qualified offers you get through Sparrow. That way, you can figure out which loan option is really best for you.
>> MORE: Parent PLUS Loans: everything you need to know
If you decide to get a Parent PLUS Loan, then your next step is meeting the loan eligibility requirements. To qualify for a Parent PLUS Loan, you have to be a parent (biological or adoptive) of a dependent undergraduate student. The student must also be enrolled at least part-time in college.
Additionally, while there is no credit score requirement, you can’t have any adverse credit history. Adverse credit history includes having:
- Delinquent or defaulted accounts
- A foreclosure or repossession
- Bankruptcy discharge
- Wage garnishment
- Tax lien
- Write-off of federal student debt
If you have any of these on your credit report, you may not qualify for a Parent PLUS Loan on your own. However, you can add an endorser to the application to help you qualify. Endorsers work similarly to cosigners. As long as they don’t have any adverse credit history, they should help you qualify.
If you meet all the requirements, apply for the loan by filling out the application online.
Private Student Loan Options
If you do not qualify for a Parent PLUS Loan, you should look into private parent loans. Keep in mind, though, that these usually have stricter requirements. Qualified borrowers have, at least, a steady income and a good credit score. A good credit score means a score in the mid-600s or higher.
>> MORE: What credit score is needed for a student loan?
While it’s possible to get a loan with poor credit, you will receive much higher interest rates. If you do have a poor credit history, think about getting a cosigner. This will bring down the loan’s interest rate.
When shopping around for private loans, also make sure to prequalify for each lender. Pre-qualification is a way to see what rates lenders can offer you without doing a hard credit check. They do a soft credit check instead. Once you have done that, compare the rates from each lender to help decide which is right for you. You can do this on the Sparrow website.
>> MORE: Find your pre-qualified parent student loan rates
Private Parent Loans for Bad Credit
To help get you started, we’ve made a list of lenders who offer the best private parent loans for bad credit.
>> MORE: Compare the best student loans for parents with bad credit
The latest rates from Sparrow’s partners
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Arkansas Student Loan Authority
The Arkansas Student Loan Authority (ASLA) is a state lender that offers educational funding for Arkansas residents. Through their Family Loan, they offer different repayment options, an autopay discount, and strong customer service.
Fixed APR range: 3.20% to 6.42%
Variable APR range: N/A
Minimum credit score: 650
See disclosures.
College Ave
College Ave is a well-known private student lender. They offer affordable financing, flexible repayment options, and strong customer service.
Fixed APR range: 5.05% to 16.99%
Variable APR range: 5.49% to 16.99%
Minimum credit score: mid-600s
See disclosures.
Earnest
Earnest is a well-known private student loan lender. They offer flexible repayment options and longer grace periods. Residents in Nevada do not qualify for a loan with Earnest.
Fixed APR range: rates start at 4.42%.*
Variable APR range: rates start at 5.62%.*
Minimum credit score: 650
See disclosures.
*Rates include a 0.25% AutoPay discount.
INvestED
INvestED is a student loan lender that offers educational funding for Indiana residents and students. They offer affordable financing options and have a variety of repayment plans.
Fixed interest rates range from 4.61% to 7.62%. Variable interest rates range from 7.88% to 12.34%.
The minimum credit criteria is 670.
See disclosures.
SoFi
SoFi is a well-known private lender. They offer various repayment options and unique member benefits such as career coaching. If your child is enrolled less than half-time, however, you will not qualify.
Fixed interest rates range from 6.50% to 14.83%. Variable interest rates range from 6.32% to 14.83%.
The minimum credit criteria is the mid-600s.
See disclosures.
Other College Financing Options
If you are unable to qualify for a parent loan due to your credit score, there are other options to consider:
Consider Scholarships and Grants
One of the first options your child should look into before loans are scholarships and grants. These are great because they provide money to cover educational expenses and don’t have to be paid back. You can find these opportunities through the FAFSA, your child’s college, and looking on scholarship sites.
>> MORE: Different types of financial aid for college
Cosign Your Child’s Student Loan
Another option you have is to cosign your child’s loan. If you are unable to take out a private loan yourself, you can have your child take out a loan with you as a cosigner. That way, you are still helping and contributing to their college costs, but you don’t have to take out a loan on your own.
Have Your Child Borrow the Loan By Themself
In cases where you can’t cosign a loan with them, talk to your child about borrowing the loan on their own. Let them know you’ll be there to guide them throughout this process so they still feel your support.
Work on Raising Your Credit Score
Of course, in the long run, raising your credit score is a move that will benefit you immensely. Start by checking your credit report to see what’s bringing it down and work on those weak points. You’ll also want to make payments on time, pay off old debt, and lower the amount of credit that you use. It takes time but, eventually, you’ll start to see a difference.
>> MORE: How to improve your credit score
Final Thoughts from the Nest
You have many options to help you cover your child’s education costs, even if you have bad credit. There are many great student loans for parents with bad credit.
Sparrow can help you find them. By filling out the Sparrow application, you’ll be matched to what parent loans you qualify for from our partnering lenders. You can even compare each student loan option side-by-side so you’re confident in your decision. Our goal is to help you find the best loan for you and your child to help maximize their college experience.
Sparrow’s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.
Interest rates shown in this article may include a 0.25% auto-debt interest rate reduction.