You’ve probably seen these advertisements with get a student loan without credit history and you were surely attempted to pick up the phone and make that call. However, let’s take it slowly and explore your options before signing up for any offer.
The U.S. Government is the first place you should look to when applying for student loan funds. Most loan programs fall under the Department of Education but there are other options as well.
The Department of Labor
The U.S. Department of Labor contributes to student returning to school to improve or enhance their job skills. The Department of Labor also provides a Financial Aid Advisor to help students find loans available for their particular area of interest.
New programs have been developed to provide grants and loans for those facing unemployment to allow them to acquire new skills in a different occupation where work is more plentiful.
The Federal Perkins Loan
The Federal Perkins Loan is available for both undergraduate and graduate students with a loan limit of $5,500 per year and a maximum of $27,500 for undergraduates. The funds for graduate students are limited to $8,000 per year with a cap of $60,000.
The amount received is dependent on need, other aid available and the funds available to make the Perkins Loans. This loan is made directly from the school to the student.
Stafford Plan Student Loans
Stafford plan student loans may be subsidized based on financial need or unsubsidized which required no need to be proven. Most of the plans do not require any credit history but a few of the specialized loan available through this venue do stipulate “no negative credit history”.
Limited Funds
Funds for the U.S. Government student loans are limited so applying early is highly recommended. Financial “need” is often a consideration for granting government student loans but even if students don’t think they may be qualified, they should apply as the requirements – and funds available – change frequently.
The interest rates for government student loans are low and usually 5-8%. Most of these loans have no other fees but a few will have origination fees attached which may be up to 2% of the loan amount.
Applying for student grants does not require proof of credit history. U.S. Government student grants are awarded based on financial need.
Some grants may be for amounts as low as $25 but if you qualify to receive grants from several different programs those smaller amounts add up quickly. The beauty of grants for students is that the money does not have to be repaid as long as it is used for the purpose intended – education.
Parents or Guardian
For many years, student loans with no credit history required have been made by banks using the parents or guardian of the student as a co-signer. Although the student does not need any credit history to qualify for this type of loan, the parents must be credit worthy.
The co-signer loan was a staple of educational funding for the middle class for the past two decades. In the current economic downturn, the high unemployment rate has hit the middle class extremely hard.
Families who relied on being able to provide funding for college by taking a loan on their home or qualifying for signature loans or loans against investments now may find those options closed to them.
With home values declining the equity homeowner’s counted on may have evaporated and a tight credit market makes it difficult for any but the best qualified to obtain loans.
Stock portfolios have lost much of their value and lenders no longer see those portfolios as valid collateral for student loans with no credit history required.
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Summary
Obtaining student loans to pay for college has never been more challenging than it is today.
Students who are pro-active and investigate every grant and loan option that might be available may be able to find student loans with no credit history required at reasonable terms.
Those who wait until the last moment or have credit that has been damaged may find it challenging, if not impossible, to provide higher education.
