Best Student Loans for Bad Credit

Private student loan companies generally require good to excellent credit to qualify for a loan. As a college student, you may not have established a strong credit history yet, so you usually will need a co-signer to qualify for a loan. In fact, 88% of private student loans are co-signed.

Ascent is one of the few private lenders that advertises loans for borrowers without a co-signer. And if you don’t have a credit history yet, you can apply for Ascent’s outcomes-based loan, which is based on your school, program, GPA, and career potential. You can also qualify for Ascent’s 1% cash-back reward upon graduating from your program. 

You don’t have to be a U.S. citizen to take advantage of Ascent’s loans; Ascent also lends to Deferred Action for Childhood Arrivals (DACA) students. 

Because Ascent is willing to lend to students based on their potential rather than their credit, Ascent does have higher APRs than other lenders. And it doesn’t have a prequalification tool, so you cannot check your eligibility or view loan options without undergoing a hard credit check. 

Shopping around is key to finding the best rates for private student loans. But requesting quotes from individual lenders can be time-consuming; Credible makes it easier. 

With Credible, you fill out one form and receive offers from up to eight lenders without affecting your credit score. Credible works with a variety of lenders, and each has its own eligibility requirements and repayment policies. 

You can improve your chances of getting a loan with less-than-perfect credit by adding a co-signer to your application. According to Credible, about 85% of borrowers who take out loans through its platform have a co-signer.

Credible’s current partners include: 

• Ascent
• Citizens Bank
• College Ave
• EDvestinU
• INvestED
• MEFA
• Sallie Mae

Credible has a best rate guarantee. If you are approved for a better rate elsewhere, you can qualify for a $200 gift card.

Although Credible works with many lenders, it doesn’t work with every major company. For example, well-known lenders like SoFi, Discover, and RISLA aren’t private student loan partners with Credible, so you may have to do some research on your own to find the best possible deals. 

International students usually need a co-signer or established U.S. credit history to qualify for private student loans. But MPOWER Financing specializes in loans for international students, and the lender doesn’t require a U.S. credit history or co-signer. Instead, your eligibility for a loan is determined by your future career potential, and is based on your school and program of study. 

MPOWER also provides visa support for international students, and the lender reports your payments and loan activity to the major credit bureaus. Over time, your timely payments can help build your credit history in the U.S. 

MPOWER’s rates are higher than you’ll find with credit-based private loans or co-signed loans; they’re in the double digits, so if you can qualify for other financial aid, exhaust those options first. 

Outcomes-based private student loans tend to have higher APRs than other loans, and may have stricter repayment terms. But Funding U’s loans have competitive rates, and it has two in-school repayment options—more than some other lenders that don’t require co-signers. 

Funding U doesn’t require borrowers to have a co-signer, and you can qualify for a loan even if you have a limited credit history. Funding U takes into consideration other factors beyond your credit reports, such as your selected college, academic record, internship experience, and potential future earnings. 

Funding U doesn’t charge application fees, origination fees, or prepayment penalties. It doesn’t charge late fees either, but there is a $25 returned payment fee.

However, Funding U has a relatively low borrowing maximum; the most students can borrow is $20,000 per year. And Funding U is only available to undergraduate students. If you’re attending graduate school, you’ll have to work with another lender. 

Edly works differently from other lenders. Rather than issuing loans with specific rates and monthly payments, Edly’s loans function as income-share agreements (ISAs). When you take out the loan, you agree to repay a portion of your income for a certain period, such as 84 months. 

You only make payments if you earn more than $30,000 per year. If you lose your job or experience a pay cut, your payments will decrease too. Your loans are considered paid in full as long as you make 84 monthly payments, even if you end up paying less than you originally borrowed. 

Most students will end up paying more than they borrowed, because of interest charges, but there is a cap on how much you will repay. The maximum amount is 2.25 times the amount financed. 

Although Edly says on its website that there isn’t an interest rate, when you take into account its financing costs and fees, it can be an expensive financing option. Its effective APR can be well into the double digits. 

Edly also states on its site that its loans aren’t actually student loans. Instead, they’re unsecured personal loans. Because of how Edly’s loans are structured, they don’t accrue interest in the same way as traditional student loans. As a result, Edly borrowers cannot claim the student loan interest tax deduction on their taxes.