Federal student loans are specifically designed to assist students who are in their hot pursuit of college degree and make student loan easily accessible even for bad credit. Even private lenders offer bad credit student loans to students who have high earning potential.
Having a high merit and not able to attend college due to the rising costs of education fees is a pathetic situation and the various private and government lenders see to it that deserving students with bad credit history meet their college expenses to complete the degree. Even if the student has a bad credit, there are plans like PLUS for their parents who can avail of the loans for their child's education.
The bank or credit union examines the student's credit history and determines the level of risk. Based upon the severity of bad credit, the interest rate on the student loan is fixed. Generally, the private student loans have greater interest rate than the federal student loans for students with bad credit. If the field chosen is medicine or law, private lenders are more eager to offer loans to students with bad credit.
Bad credit student loans are of various kinds like the federal Stafford loan and the PLUS loan. The first type is offered directly to the students with a deferred period of payment, usually six months, upon completion of their studies. The interest rate is kept low at about 8.25 percent. The interest is paid either by the government or by the student himself, during the deferred period depending upon whether he has opted for subsidized or unsubsidized Stafford student loan.
The parents’ loan for undergraduate students called the PLUS loan is paid to the parents on behalf of their child. If the parents cannot qualify, then a cosigner is needed. The other type of loan called Perkins loan is the loan that offers bad credit student loan through the college. It is jointly funded by the college and the government, where the repayments have to be made to the college. The interest is usually maintained at five percent. The repayment can be started after the student finishes the college degree and earns sufficiently from the career.
Although the primary aim of bad credit student loans is to fund the students to complete their studies in college, it also gives them a chance to improve their credit ratings. Thus with bad credit student loan, the students can pursue studies without worries.