How to Rise Above the Bad Credit to Secure Student Loans for Grad School

Posted by Frank Gogol in Loans | Updated on September 14, 2023

At a Glance: Navigating graduate student loans with bad credit can be challenging, but options exist. Explore federal loans for flexibility and private loans to bridge funding gaps. Research lenders, consider terms, and consult financial experts to make informed choices. Your educational dreams are achievable with the right financial approach.

If you’re considering grad school, but your credit score is as low as your enthusiasm for all-night study sessions, don’t be discouraged. Contrary to popular belief, having bad credit doesn’t mean you have to give up on your dreams of securing a career. There are plenty of options to help you finance your grad school journey, even with less-than-ideal credit.

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Where to Find Graduate Student Loans for Bad Credit?

So, now that you know you can, in fact, secure a graduate loan with a less than stellar credit, you’re probably wondering where to start your search. Luckily, there are a few places you can turn to without the fear of judgment or rejection.

Federal Student Loans:

First, start by exploring federal student loans. These loans are popular for grad students because they tend to have lower interest rates and more flexible repayment options. Don’t worry if your credit isn’t great – federal student loans have varying credit requirements, and some don’t require a credit check. When it comes to federal student loans, there are a few different types to consider. These include:

Direct Unsubsidized Loan:

Available to both undergraduate and graduate students
Do not require a credit check
A great option for those with bad credit
The interest rates are fixed and tend to be lower than those of private loans

Direct PLUS Loan

Available to graduate students and professional students
Require a credit check
Credit requirements are not as strict as those for private loans.
If you have bad credit, you may still be eligible for a Direct PLUS Loan as long as you don’t have an adverse credit history.

Private Student Loans

In addition to federal student loans, private student loans are available for graduate students. Private lenders often have their own credit requirements, which can vary from lender to lender. Some lenders may be more willing to work with students with bad credit, while others may require a cosigner. It’s important to shop around and compare different lenders to find the best option for your specific financial situation.

When considering private student loans, reviewing the terms and conditions carefully is important. Pay attention to the interest rates, repayment options, and any fees associated with the loan. It’s also a good idea to consider the lender’s reputation and read reviews from other borrowers. Doing your research can help ensure that you find a reputable lender on terms and conditions.

Which is Better?

While having bad credit can make finding graduate student loans more challenging, there are still options available. Federal student loans, such as Direct Unsubsidized Loans and Direct PLUS Loans, can be a good starting point. Private student loans from reputable lenders can also be an option, but it’s important to review the terms and conditions carefully.

It’s worth noting that graduate student loans, whether federal or private, are a serious financial commitment. Before taking out any loans, it’s important to carefully consider your future earning potential and how the loan payments will fit into your budget.

Both loans are suited for audiences with specific needs. To better understand which loan may be suitable for you, speak with a financial advisor or a representative from your school’s financial aid office. But with some research and careful consideration, you can find the right graduate student loans for your needs, even with bad credit.

Federal Student Loans for Grad School: Requirements

It’s important to note that the requirements can vary depending on which type of loan you’re applying for. Below, we’ll look at the requirements for direct unsubsidized loans and grad PLUS loans

Requirements for Direct Unsubsidized Loans

You may have just been looking for specific requirements for these loans. For direct unsubsidized loans, the main requirement is that you must be enrolled at least half-time in a graduate program. This means that as long as you’re pursuing your graduate studies with the necessary dedication, you can benefit from the financial assistance provided by these loans.

Requirements for Grad PLUS Loans

On the other hand, Grad PLUS loans have a few additional requirements. In addition to being enrolled at least half-time, you must also meet the general eligibility requirements for federal student aid. This includes being a U.S. citizen or eligible noncitizen, having a valid Social Security number, and maintaining satisfactory academic progress. These requirements ensure that the loans are provided to students who are committed to their education and genuinely need financial assistance.

It’s important to note that both types of loans require you to complete the Free Application for Federal Student Aid (FAFSA) to determine your eligibility. This application considers various factors such as your income, assets, and family size to assess your financial need and determine the amount of aid you may receive. So, regardless of the type of loan you’re considering, it’s reassuring to know that there are options available to you. These loans provide a lifeline to grad students determined to pursue their academic goals and further their careers.

What to Do If You Have an Adverse Credit History?

If you have an adverse credit history and your grad school dreams are on the line, don’t despair just yet. There are a few steps you can take to improve your chances of qualifying for student loans.

First, explore alternative funding options. Scholarships, grants, and part-time jobs can all help reduce your reliance on loans. This can lessen the financial burden and improve your chances of securing a loan if you still need one.
Second, take the time to work on improving your credit score. While this may not be feasible if you need loans immediately, it’s worth investing some effort into rebuilding your credit. Making timely payments, reducing debt, and keeping your credit utilization low can all contribute to a better credit score.
Finally, consider finding a cosigner. Having a cosigner with a good credit score can greatly increase your chances of getting approved for a loan. Plus, having a cosigner can also help you secure a lower interest rate, saving you money in the long run.

Private Student Loans for Grad School: Good Credit or a Cosigner Needed

If federal student loans and other funding options don’t fully cover your grad school expenses, private student loans can fill the gap. However, keep in mind that private lenders often require borrowers to have good credit or a cosigner with good credit in order to qualify.

If you have a good credit score, private lenders generally offer more favorable loan terms, such as lower interest rates or more flexible repayment options. On the flip side, if your credit score isn’t up to par, having a cosigner can significantly improve your chances of getting approved for a loan.

So, don’t let bad credit keep you from pursuing your educational goals. With a little research and determination, you can find student loan options to help you finance your grad school journey.

Best Private Student Loans if Federal is Not an Option

When federal student loans don’t cover your educational expenses, private student loans and personal loans can bridge the gap. They offer competitive interest rates, flexible repayment terms, and excellent customer service.

Here are some of the best private student loan options so you can take charge of your education, regardless of your credit score:

AmOne
Spring Loans
First Premier Lending
College Ave
Upgrade
Sallie Mae

Read on to learn more about our top picks!

AmOne

AmOne is a game-changer in the lending sphere. With a razor-sharp focus on loan matching, they are the go-to for borrowers seeking the ideal lender connection. Those navigating the winding roads of finance can trust AmOne to lead them to bespoke solutions. While not specifically a student loan lender, personal loans can be used to pay for education costs.

Check rate

on website

AmOne Personal Loan

4.5

Min. credit score

600

Fixed APR

3.99%-35.99%

Variable APR

N/A

Overview

Minimum credit score: 600.
Fixed APR: 3.99%-35.99%.
Loan amounts: $1,000 to $50,000.
Repayment: 1 to 7 years.

Qualifications

Must be at least 18 years old.
Must be a U.S. citizen or permanent resident.
While there’s no specific income requirement, a consistent source of income is essential for the applicant.

Pros

Suitable for individuals with lower credit scores.
No cost for the matching service.
Attractive loan rates.

Cons

Acts as an intermediary, not a direct lender.
Risk of multiple contacts from prospective lenders.
Lack of clarity on lender details.

Spring Loans

Within the sphere of Spring Loans, a plethora of lending options awaits. Tailored for those seeking flexibility, Spring Loans presents an array of terms, ensuring solutions for a wide range of needs, including education.

Check rate

on website

Spring Loans Personal Loan

4.2

Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

Overview

Minimum credit score: None.
Fixed APR: 27.00%
Loan amounts: $3,000.
Repayment: 48 months.

Qualifications

Demonstrate a recurrent income.
Minimum age prerequisite: 18 years.
Validate U.S. citizenship status with an SSN.
Provide a legitimate U.S. driver’s license or a state identity card.
Establish a functional bank account for incoming deposits.
Adhere to any specific demands by the loan provider.

Pros

Open to applicants with any credit background.
Four-year loan period aids in structured financial management.
The $3,000 offer addresses several short-term financial challenges.
Wide-reaching eligibility criteria invite a broad spectrum of applicants.
The focus on dependable income over job title benefits varied income sources.

Cons

The set 27% APR is higher than many alternatives.
Restriction to a $3,000 loan might not cover all financial outlays.
Possessing specific IDs is mandatory, sidelining some applicants.
A prerequisite for an ongoing bank account may limit certain users.

First Premier Lending

Navigating the world of 1st Premier Lending, one encounters a dedication to tailor-made lending. Their knack for tuning into the distinct needs of clients has led to the creation of a vast loan portfolio, spanning personal dreams to business aspirations.

Check rate

on website

First Premier Lending Personal Loan

4.2

Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

Overview

Minimum credit score: None.
Fixed APR: 27.00%.
Loan amounts: $3,000.
Repayment: 48 months.

Qualifications

Maintain a consistent source of income.
Must be at least 18 years of age.
Possess valid U.S. citizenship and a legitimate social security number.
Hold a current U.S. driver’s license or state-issued ID.
Keep an active bank account for direct deposit.
Satisfy any lender-specific criteria, such as credit rating, borrowing history, or place of residence.

Pros

No minimum credit score requirement allows accessibility for those with varied credit histories.
48-month term provides clarity and allows for long-term financial planning.
Specific loan amount of $3,000 can meet many short-term financial needs.
Broad set of qualifications make the loan accessible to a wide range of people.
Emphasis on consistent income, not necessarily employment type, allows flexibility for borrowers.

Cons

A fixed APR of 27% is relatively high.
Loan amount is capped at $3,000, which might not cater to larger financial requirements.
Requirement of a U.S. driver’s license or state-issued ID could exclude some individuals.
Mandatory active bank account could be limiting for those who are unbanked.

College Ave

College Ave offers variable APRs between 5.49% – 16.99% and fixed APRs from 4.59% – 16.99%. Loan amounts vary from $1,000 to the total cost of attendance, with flexible terms of 5, 8, 10, or 15 years and a minimum credit score requirement of 650.

Check rate

on website

College Ave Private Undergraduate Student Loan

4.8

Min. credit score

600 or better

Fixed APR

4.41% - 16.99%

Variable APR

5.49% - 16.99%

Overview

Minimum credit score: 600 or better.
Fixed APR: 4.59% – 16.99%.
Loan amounts: 5.49% – 16.99%.
Repayment: 5, 8, 10, 15, and 20 years.

Qualifications

U.S. citizen or permanent resident.
For undergraduate loans: Part-time enrollment at an accredited college/university.
International students: Need a Social Security number and a co-signer.
For refinance loans: Must be 18 years or older.
For refinance loans: Graduation from an eligible school is required.

Pros

Prequalify with a soft credit check
Flexible repayment options
Offers co-signer release for private loans

Cons

Charges late fees
Must have graduated to be eligible to refinance
Half of repayment term must have passed to release co-signer

Upgrade

Upgrade offers loans ranging from $1,000 to $50,000 with APRs between 8.49% and 35.99%. They provide flexible terms of 24 to 48 months and require a minimum credit score of 600.

Check rate

on website

Upgrade Personal Loan

5.0

Min. credit score

560

Fixed APR

8.49% - 35.99%

Variable APR

N/A

Overview

Minimum credit score: 560
Fixed APR: 8.49% – 35.99%
Loan amounts: $1,000 to $50,000
Repayment: 3 to 5 years (7 years on some larger loans)

Qualifications

Possess an active bank account.
Able to provide a legitimate email address.
Minimum age requirement: 18 years (19 for Alabama residents).
Credit score of 600 or higher.
Annual income of $25,000 or more.

Pros

Willing to accommodate borrowers with a credit score as low as 560.
Offers flexibility with a range of loan amounts from $1,000 to $50,000. This can be suitable for both small and large financial needs.
Provides options for repayment, allowing borrowers to choose a timeline that best suits their financial situation.
Once approved, borrowers can access funds in just one day, which is useful for urgent financial needs.

Cons

Origination fees can go as high as 9.99%, which might add a significant cost to the loan.
Apart from the origination fee, there are fees for late payments and failed payments, which can add up if one is not careful.
While there is an option to extend repayment for larger loans up to 7 years, it’s not standard for all loan amounts.

Sallie Mae

Sallie Mae provides variable APRs from 6.37% to 16.70% and fixed APRs from 4.50% to 15.49%. Loan amounts can range from $1,000 to the total amount to cover the cost of attendance, with terms lasting 10 to 15 years. A credit score of 745 may be required.

Check rate

on website

Sallie Mae Undergraduate Student Loan

4.5

Min. credit score

Mid-600's

Fixed APR

4.50-15.49%

Variable APR

6.37-16.70%

Overview

Minimum credit score: Mid-600’s.
Fixed APR: 4.50-15.49%
Variable APR: 6.37-16.70%
Loan amounts: Minimum of $1,000 per year.
Repayment: 10 to 15 years.

Qualifications

Typical credit score of approved borrowers or co-signers: Does not disclose.
Minimum income: Did not disclose.
Loan amounts: $1,000 up to 100% of the school-certified expenses.

Pros

One of the few lenders to provide loans to part-time students.
Non-U.S. citizens, including DACA students, can apply with a U.S. co-signer.

Cons

You can’t see if you’ll qualify and what rate you’ll get without a hard credit check.

Final Thoughts

Navigating the maze of graduate student loans when you have bad credit can be daunting. However, it’s essential to remember that there are numerous options available, both federal and private. It’s all about finding the right fit for your unique situation. From the flexible conditions of federal loans to the range of private student loan options, there are avenues you can explore. While securing the best terms might require extra legwork, your dedication to advancing your education and bettering your future is worth the effort. Always approach borrowing with an informed mindset, considering the long-term impacts on your financial well-being. Reach out to experts, do your research, and remain steadfast in your pursuit of higher education. Your dreams are valid, and with the right financing, they can become a reality.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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