Loans For Students With Terrible Credit
By Jeremy Thompson
Student loans or other financial aid provided
to students while obtaining a college education is credit extended to a student
without any proof of income, but can normally take years to pay-off. Loans
can be subsidized either by the government and/or a private lender. Often,
a very minimal interest of 5 percent or less is incurred when a student is
granted such a loan. As the borrower, the student is not compelled to pay
the interest while still in school, which generally makes it easier for the
borrower to pay-off debts.
Today, a financial crisis looms over 70 percent
of college students concerning their student loans. Even when college students
seek the maximum amount made available from their student loans, many
undergraduates still find themselves short of cash to cover other necessary
college expenses while still in school. Recent developments to this effect
also show that more and more undergraduates use at least one credit card
on top of the student loans they have drawn out for college.
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Because many financial institutions' credit card marketing
campaigns have reached virtually every college and university across the
country, it has become easier for college students to take advantage of them.
Students with very little, or worse --- no income --- use their credit cards
to pay for school fees and living expenses, including their particular student
loans. With no idea of how much debt they will eventually incur based on
bank interests, undergraduates sustain debts and a terrible credit history
while still studying. And since the interest keeps piling up, their student
loans continue to be left unpaid. In the long run, when these students leave
school, they will have accumulated huge debts or terrible credit ratings
that will make it difficult for them to apply for a car loan, rent an apartment,
or take out a mortgage when needed.
Fortunately, even with a terrible credit rating
or bad credit history; there is still hope for students to obtain financial
aid. These particular loans will undoubtedly carry higher fees and interest
rates. Nonetheless, students with a terrible credit history can still seek
aid with help from government programs such as these:
• Perkins Loan The Perkins Loan is granted
to college students who need it the most. It is given to undergraduate and
graduate students with extreme and extra-ordinary financial necessity. The
money comes from the federal government but it is the individual college
that awards it to the borrower. A credit history will not need to be checked,
but if the borrower has an existing delinquent loan with the federal government,
he or she will not qualify for the Perkins Loan until that debt is reimbursed.
• Perkins PLUS
In other extreme cases,
parents of the students will be expected to pay-off their children's debt.
In this situation parents can benefit from PLUS, or Parent Loans for
Undergraduate Students. An existing delinquent loan will still prohibit the
borrower from qualifying for PLUS. However, a student with terrible credit
history or even a low credit score will be granted the loan, provided they
are not delinquent with succeeding PLUS payments.
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•
Consolidation loans
Consolidated loans apply to students who have
incurred multiple loans which can be combined into one federal loan, payable
once per month. In short, it is much like refinancing. Lending companies
may or may not check credit records, depending on how the particular institution
operates. Even so, any existing delinquent account will prohibit a student
from profiting from loan consolidation.
• Pell Grant and Federal Supplemental Education
Opportunity Grant
Unlike student loans, these government grants
do not need to be repaid, although, not all students are eligible for them
either. Certain requirements have to be checked and passed before a student
is rewarded one of these grants.
• Loan Forgiveness Program Under the Loan
Forgiveness Program, a student's loan will be paid-off provided they do volunteer
work such as military service, choose to teach at a low-income school, or
practice medicine in certain government selected communities.
Some colleges may even have alternative programs
for specialized studies that are funded and backed by private lending firms.
These programs, however, may not be endorsed by the school itself but may
provide great assistance to the student in need.
Remember that a student loan is never forgiven
to bankruptcy. The government expects each student who has been granted a
federal loan to pay-off their loan debts and delinquencies, no matter how
long it takes. It is important that while still in school, a student develops
correct credit habits to ensure a very good credit rating after graduating
from the university. This too, is a preparation for what lies ahead after
college
life. |
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