How to Find Student Loans with No Credit History

Applying for a No Credit Check Student Loan

Oct 18, 2009

Never had credit before and in need of a no credit check student loan for college? Discover what student loans with no credit history are available.

Identifying a source of student loans with no credit history can prove difficult. The bank will perform a credit check prior to lending money and will normally reject applications from those who have yet to establish their credit worthiness. However, it may be possible to get a no credit check student loan from the federal government.

Student Loans with No Credit History

The reason that banks don't like lending money to private applicants is because they have no way of assessing the credit worthiness of the applicant. The pure size of the loan (regularly in excess of $50,000) means that the majority of banks will not be prepared to offer applicants a no credit check student loan.

Federal Student Loans

Perkins loans: This is a means tested loan that is only suitable for the most needy applicants. However, those who qualify for a federal Perkins loan will benefit from a fixed rate, low interest student loan (currently just 5%). The eligibility formula is decided by congress, but applied by the school itself. The financial aid administrator is able to decide how much money is lent to each applicant. Upon graduation, it is possible that certain public sector employees (nurses, teachers and the armed forces) can benefit from a debt forgiveness program.

Stafford loans (unsubsidized): With an interest rate of just 6.8% (subject to change), the Stafford loan is the most popular source of borrowing. It is possible to borrow up to $65,500 for either graduate or professional studies. The repayment term is variable, although it is typically 10 years. Repayments will normally commence 6 months after graduation.

Stafford loans (subsidized): These no credit check student loans are available at just 6% (subject to change), but they also involve a means test.

PLUS loans: Although there is a credit check, there isn't a means test. It provides parents with an opportunity to help their son or daughter with the cost of getting a college education. They typically provide a top-up to Stafford and Perkins loans.

Cosigned Student Loans with No Credit History

A no credit check student loan could be available from a bank, provided the applicant can find an agreeable cosigner. The cosigner should have a good credit history and be in secure and stable employment. It is important to understand that this individual takes on the responsibility of the loan in the event of the student defaulting. However, some banks will release the cosigner once six months payments have been received from the borrower.

The best source of student loans with no credit history is the federal government as there is no credit check and the interest rates are more favorable. Those who are likely to need to borrow money from a bank will need to establish their credit by taking out a new credit card. Alternatively, it is possible to borrow money from a bank with a cosigner.

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