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Best Student Loans for Bad Credit

Ascent, MPOWER, Funding U, and our other top picks offer loans for bad credit

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Private student loans typically require excellent credit or a co-signer, but there are a few lenders that offer loans to borrowers with less-than-perfect credit. You may end up paying more than a person with good credit, however, and you may need to consider lenders with non-traditional qualifications.

We identified the best private student loans for bad credit based on their rates, eligibility requirements, and repayment options, among other important factors. 

Best Student Loans for Bad Credit of 2023

  • Best for No Co-Signer: Ascent
  • Student Loan Marketplace: Credible
  • Best for International Students: MPower
  • Best for Outcomes-Based Approval: Funding U
  • Best for Income-Based Repayment: Edly

When you need to borrow money to pay for college, federal student loans are the best starting point. They have relatively low interest rates and repayment benefits, and undergraduate students don’t have to worry about passing credit checks for federal subsidized or unsubsidized loans. Unfortunately, there are caps on how much you can borrow in federal student loans, so you may need to take out private student loans to cover the remainder. 

Best Student Loans for Bad Credit
Best Student Loans for Bad Credit

Best for No Co-Signer : Ascent

Pros & Cons
  • No-co-signed loans are available

  • Cash back graduation reward 

  • U.S. citizenship not required

  • Higher APRs than other lenders

  • No parent loan options

  • No loan prequalification tool

Why We Chose It

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. 

Repayment Options

Ascent’s loan terms range from 5 to 15 years. How payments are handled while you’re in school depends on whether you take out a credit-based loan or an outcomes-based loan. 

With Ascent’s credit-based loan, you have the following payment options: 

  • Interest-only: During your time in school, you are only required to make payments against the interest that accrues each month. 
  • Flat: With a flat repayment plan, your payments are just $25 per month while you’re in college. 
  • Deferred: Under a deferred repayment plan, you defer payments until after you leave school. 

If you have an outcomes-based loan, you can defer payments until nine months after your graduation date.

Eligibility Requirements

To qualify for Ascent’s loans without a co-signer:

  • You must be enrolled as a college junior or senior.
  • You must be a full-time student.
  • You must be at least 18.
  • You must be a U.S. citizen, permanent resident or DACA student.
  • You must have a GPA of 2.9 or higher.
  • For credit-based loans, borrowers must have more than two years of credit history and a minimum credit score.
  • For outcomes-based loans, borrowers do not need a credit score or credit history.

Student Loan Marketplace : Credible

Pros & Cons
  • Free to use

  • Compare multiple lenders at one time

  • Best rate guarantee

  • Doesn’t work with all lenders

  • Most borrowers will need a cosigner

  • Policies vary by lender

Why We Chose It

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. 

Repayment Options

Repayment terms vary by lender, but you can typically choose between the following repayment options: 

  • Immediate repayment
  • Interest-only repayment
  • Flat repayment
  • Deferred repayment

Forbearance and financial hardship policies are dependent on the lender issuing the loan. 

Eligibility Requirements

Each lender on Credible’s platform has its own borrower requirements. In general, you need to meet the following requirements: 

  • You must be the age of majority in your state (18 in most locations).
  • You must be enrolled in school at least half-time.
  • You must have good to excellent credit (or a credit-worthy co-signer).

Some of Credible’s partners only lend to residents of certain states. For example, EDvestinU only issues loans to residents of 19 states and Puerto Rico; if you live in another state, you aren’t eligible for a loan. 

Private loans can have fixed or variable interest rates. Although variable-rate loans can be appealing because of their low initial rates, they can increase over time.

Best for International Students : MPower

Pros & Cons
  • No co-signer or collateral needed

  • International students are eligible

  • Interest-only payments while in school

  • Higher APRs than other lenders

  • Not available to first- or second-year students

  • Only works with some schools

Why We Chose It

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. 

Repayment Options

MPOWER only has one repayment option. Both undergraduate and graduate student loans have 10-year repayment terms. You make interest-only payments while you’re in school and for six months after graduation. If you want to pay off your loan early, there is no prepayment penalty. 

Eligibility Requirements

To qualify for an MPOWER loan, you must meet the following requirements: 

  • You must be an undergraduate or graduate student within two years of graduation; first- and second-year students are not eligible. 
  • You must attend one of MPOWER’s partner schools
  • You must be an international student, DACA recipient, U.S. citizen, refugee, or asylum seeker.

Best for Outcomes-Based Approval : Funding U

Pros & Cons
  • No co-signer required

  • Two repayment options

  • Students may qualify for forbearance

  • Low borrowing maximums

  • Not available in all states

  • Does not offer loans for graduate school

Why We Chose It

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. 

Repayment Options
  • Fixed: With the fixed repayment plan, you pay $20 per month while you’re in school and for six months after graduation. 
  • Interest-only: If you opt for interest-only repayment, you make payments against the interest that accrues each month while you’re in college and for six months after graduation. Choosing interest-only repayment over fixed repayment will qualify you for a 0.5% interest rate discount. 

Repayment terms are 10 years, and the loans are repaid with 120 monthly interest and principal payments beginning six months after graduation. 

For a lender that doesn’t require co-signers, Funding U has a generous forbearance policy. If you need to adjust your payments while you’re in school, you can switch from interest-only repayment to fixed monthly payments. After graduation, you may qualify for up to 24 months of forbearance if you experience financial hardships, so you can pause your payments while you get back on your feet. 

Eligibility Requirements
  • You must be a full-time undergraduate student.
  • You must be the age of majority in your state (18 in most states).
  • You must be a U.S. citizen, permanent resident, or DACA recipient.

Funding U is only available in 38 states. If you live in a non-eligible state, such as Maine or Nevada, you will have to find another lender. 

Best for Income-Based Repayment : Edly

Pros & Cons
  • No co-signer required

  • Simple repayment terms

  • Defer payments if income decreases

  • First- and second-year students not eligible

  • Low borrowing maximums

  • Loans are unsecured personal loans

  • Unclear rates and fees

Why We Chose It

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.

Repayment Options

With Edly, you agree to repay a percentage of your income, such as 7% of your earnings, for 84 months. Your load is paid in full after making 84 payments or after you repay 2.25 times your initial borrowing amount, whichever comes first. No payment is required when your income is less than $30,000, but months without payments do not count toward the required 84 monthly payments. 

Eligibility Requirements
  • You must be enrolled in school at least half-time. 
  • You must be a college junior or senior or graduate student. 
  • You must be at least 18 years old. 
  • You must be a U.S. citizen or permanent resident. 

Final Verdict

For college students with poor credit or no credit history, qualifying for a private student loan can be challenging. Credible can help you compare lenders and find the best possible rates, especially if you can apply with a co-signer. If a co-signer isn’t an option, Ascent or Funding U can be excellent options. 

Edly could be a useful solution for borrowers looking for an alternative to the traditional student loan model. Its income-based repayment structure allows you to pay a percentage of your income, and you don’t need a co-signer. 

However, explore all of your other financing options before turning to these loans. Student loans for borrowers with poor credit and no co-signer can be expensive, so make sure you utilize all available federal, state, and institutional aid first. 

If you’re able to apply with a co-signer, you’ll have more loan options available. See our picks for the best overall student loans to shop around.

FICO Credit Score Ranges

Rating Score Range
Excellent 800–850
Very Good 740–799
Good 670–739
Fair 580–669
Poor 300–579
No Credit Not enough data to score

Guide to Choosing Student Loans for Bad Credit

Federal Student Loans vs. Private Student Loans

When shopping for student loans, federal loans should be your first choice. They offer lower rates than private loans, and they provide more repayment options and additional borrower benefits. 

The government doesn’t perform credit checks on undergraduate or graduate students taking out federal Direct subsidized or unsubsidized loans. And while Parent and Grad PLUS loans do require credit checks, they’re less stringent than the credit checks that private lenders perform. The government looks to see if you have an adverse credit history, a term referring to specific circumstances, such as a history of bankruptcies or foreclosures. 

Federal loans are also eligible for benefits like income-driven repayment (IDR) plans, loan forgiveness, and federal forbearance. 

Private student loans are credit-based, so they’re harder for college students to qualify for on their own. In fact, private student loans make up just 7% of outstanding student loans. They tend to have higher interest rates than federal loans, and they have fewer repayment options. And private student loans aren’t eligible for federal loan forgiveness programs. 

How to Qualify for Student Loans With Bad Credit

If you have bad credit, you may qualify for student loans through the following options: 

  • Apply for federal loans: Most federal loans are available without credit checks, so you can get a loan even if you have poor credit. 
  • Add a co-signer: With private student loans, you may qualify for a loan—or secure a better interest rate—by adding a co-signer to your application. 
  • Look for alternative loans: Some lenders, such as Funding U, use alternative factors to decide your eligibility for a loan. Besides your credit, they look at your school, major, employment experience and earning potential, so you may have a better chance of qualifying for a loan through an outcomes-based lender. 

Fill out the Free Application for Federal Student Aid (FAFSA) even if you think your family makes too much money to qualify for assistance. According to the National Center for Education Statistics, 87% of first-time, full-time undergraduate students received financial aid.

Student Loan Alternatives for Borrowers With Bad Credit

Before turning to student loans, consider the following financing options: 

  • Scholarships: Unlike student loans, scholarships don’t have to be repaid. You can win scholarships based on your achievements. For example, you can qualify for a scholarship based on your grades or athletic performance. 
  • Grants: Like scholarships, grants are a form of gift aid, and they don’t need to be repaid. They’re usually based on your financial needs, so they are generally awarded to low- to middle-income students. 
  • Work-study: Some schools participate in the federal work-study program. If you qualify based on your financial situation, you can get a job related to your field of study and use your earnings to pay for some of your education. 
  • Part-time jobs: If your school doesn’t have a work-study program, you also have the option of getting a part-time job or side gig on your own. Working a few hours a week can help offset some of your college expenses. 

Your state can be an excellent source of financial aid, including state-issued grants, scholarships and low-interest student loans. Contact your state education agency to find out about available opportunities.

Frequently Asked Questions

  • What Credit Score Do I Need for a Student Loan?

    In general, you need good to excellent credit to qualify for private student loans. That means you need a credit score of 670 or higher. However, you may be able to qualify for a loan if you add a co-signer to your application, apply for an outcomes-based loan, or apply with a lender that specializes in borrowers with limited or no credit. 

  • Can You Be Denied for a Student Loan?

    Most private student loans are credit-based. If you have poor credit or no credit history, the lender can deny your application. 

    Most federal loans are available without credit checks, with the exception of PLUS loans. If you have an adverse credit history—meaning you declared bankruptcy, are in foreclosure, or have a current tax lien—you will need an endorser (like a co-signer) to qualify for a loan. 

  • Are There Student Loans That Don’t Require a Credit Check?

    Federal subsidized and unsubsidized loans for undergraduate and graduate students don’t require credit checks. 

    Private student loans—even those that don’t require co-signers or that are income-based—usually require a credit check. You may qualify for a loan even if you have poor credit or no credit history, but you should still expect a credit check.

  • How Do Student Loans Affect Your Credit?

    Student loans can affect your credit in several ways. The most significant impacts come from the following: 

    • Credit inquiry: When you apply for a student loan, the lender will check your credit. Each hard credit inquiry can affect your credit score, causing it to drop slightly, although multiple inquiries in a short period of time may all be counted as one inquiry
    • Credit mix: If you take out a student loan, you add that installment loan to your credit reports. If you don’t have other installment loans, taking out a student loan can improve your credit mix and boost your credit score. 
    • Payment history: Your payment history makes up 35% of your FICO credit score. As you make your student loan payments on time, the lender reports the activity to the credit bureaus, and you can build good credit. Conversely, missing or late payments can significantly damage your credit. 
    • Amounts owed: The amount of debt you have also plays a significant role in your credit score, but installment debt (like student loans) has a much smaller effect than revolving debt (like credit cards).


The Balance is dedicated to providing consumers with unbiased, comprehensive reviews of student loan lenders. We collected thousands of data points across 30 lenders—including loan types, interest rates, fees, loan amounts, and repayment terms—to ensure that we help readers make the right borrowing decision for their education needs.

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Article Sources
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  2. Federal Student Aid. "Subsidized and Unsubsidized Loans." 

  3. Enterval Analytics. "Private Student Loan Report," Page 3.

  4. Congressional Research Service. "An Economic Perspective of Income Share Agreements."

  5. Federal Student Aid. "Federal Versus Private Loans." 

  6. Federal Student Aid. "What Is an Adverse Credit History?

  7. Enterval Analytics. "Private Student Loan Report," Page 8.

  8. National Center for Education Statistics. "Fast Facts: Financial Aid." 

  9. Federal Student Aid. "Work-Study Jobs." 

  10. myFICO. "What Is A FICO Score?"

  11. Federal Student Aid. "What Is an Adverse Credit History?"

  12. myFICO. "What's In My FICO Scores?"

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