How to Get Graduate Student Loans with Bad Credit

Funding your grad school studies can be a difficult task. The costs are high and loan providers are strict in their requirements. This is all the truer if you are an international student on a visa and you have bad credit. We understand your struggle, so to help you out we’re breaking down what the options are for bad credit graduate student loans.

Read on to learn more!

2 Options for Bad Credit Student Loans for Grad School

If you have bad credit and you are looking for a graduate student loan, you have two main options:

1. Federal Graduate Student Loans
2. Personal (Private) Graduate School Loans

Each type of loan has its own benefits and drawbacks, which you’ll have to compare to make sure you get the best loans for your situation.

Federal Graduate Student Loans

Federal Graduate Student Loans have either very low or no credit requirements. This makes them a very accessible option if you have bad credit.

To get access to federal student aid and loans for grad school, you can file a Free Application for Federal Student Aid (FAFSA). The government will first process your FAFSA and then your college will put together a package outlining your different options.

The two main federal loans available to graduate students are Direct Unsubsidized Loans and Grad PLUS Loans. You don’t need to prove your financial need in order to qualify for these two loans.

We explain more about each below.

Personal Graduate School Loans

Personal graduate loans are private loans a borrower can take from a private lender. Private lenders include banks, credit unions, and online lenders. The eligibility requirements will differ from lender to lender, including the loan terms, the minimum credit score required, and more.

Federal Student Loans for Grad School

Unsubsidized Graduate Loans

Direct Unsubsidized Loans don’t have minimum credit requirements. When you apply, you don’t have to do a credit check and you also don’t need a minimum income. If you are looking for graduate student loans for bad credit, this might be your best, most affordable, option.

The loan term for a Direct Loan is generally between 10 and 25 years. With this loan option, you have access to income-driven repayment plans and possible loan forgiveness. If you are unemployed, you can also postpone your payments for up to three years. No interest will accrue during this deferment period (and also not while you are still in school).

The drawback of a Direct Unsubsidized Loan is there is a limit on the amount you can borrow. This means a Direct Unsubsidized Loan might not be able to cover all your expenses.

If your grad school fees and costs are higher than the limit, you can pay the rest with a Grad PLUS loan or private student loans for graduate students with bad credit.

Grad Plus Loans

A Grad PLUS loan is another federal loan. The big difference between this loan and a Direct Unsubsidized Loan is a Grad PLUS loan requires a credit check. This means to qualify for a Grad PLUS Loan, you can’t have a bad credit history or have any credit accounts with a balance of $2,085 or above which is more than 90 days in arrears, in collections, or charged off in the last two years.

You also can’t have a foreclosure, default determination, repossession, bankruptcy discharge, charge off of federal student aid, a tax lien or a wage garnishment in the last 5 years.

Although this might sound intense, this non-adverse credit history requirement for a Grad PLUS Loan is easier to meet than those required with private student loans. So this might still be an option if you get rejected by a private lender.

Private Student Loans for Grad School

Private student loans are a great option to fund your graduate studies if a Direct Subsidized Loan does not cover all the cost. With private loans, however, lenders generally require a good credit score and financial stability. Even though this is the norm, not all lenders require this. Some lenders look at other qualification factors to determine if you are eligible.

Some lenders also allow you to apply with a qualified cosigner. Your cosigner will have to have a good credit score and financial history. So, even though you might have a bad credit history, your cosigner can help you get a bad credit graduate student loan.

Interest rates, terms, and fees will differ from lender to lender. Below we consider the top 3 private graduate student loans for bad credit.

Top 3 Private Loans for Bad Credit

Stilt

With Stilt, there is no minimum credit requirement. This is because Stilt takes other factors into account in deciding whether or not to grant a loan. Stilt’s focus is to make loans available for immigrants and visa holders who generally do not have the opportunity to build up a good credit score. Stilt also does not require a cosigner when applying.

Stilt offers:

• APR between 7.99% and 15.99%
• Loan amounts between $1,000 and $35,000
• Loan term is up to 3 years

PNC

PNC is a traditional bank that offers only one repayment term for private student loans – 15 years. In addition to only having one repayment term, PNC is not as flexible as other lenders in other aspects as well. You can postpone your payments for a total of 12 months, but only with two-month increments per year. PNC makes use of a cosigner and they have a cosigner release option after 48 on-time payments.

PNC offers:

• APR between 5.19% and 12.29%
• Loan amounts of between $1,000 and $40,000
• Loan term of 15 years

Sallie Mae

Sallie Mae is one of the only lenders that serve part-time students and offers students up to twelve months of interest only payments. Sallie Mae does not disclose a minimum income or credit score requirement. But on average, borrowers or their cosigners have a credit score of 748. If you are not a U.S. citizen or permanent resident, you will need a cosigner who is able and qualified to apply.

Sallie Mae offers:

• APR of between 4.12% and 11.85%
• Loan amounts between $1,000 and up to 100% of the school-certified cost of attendance
• Loan terms of 5 to 15 years

Conclusion

Funding your graduate studies if you have bad credit doesn’t have to be impossible! Even if you are a visa holder. There are a few options that you can try out. If getting a federal loan doesn’t cover all your cost, consider getting bad credit graduate student loans to pay the balance. You’ll be sorted in no time!

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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