The Best Student Loans To Consider Regardless of Credit Score

Andrew Reyes
person holding bulk of books in hands
Reading Time: 4 minutes

Many potential students are discouraged from pursuing their educational dreams by the challenges of financing their studies. If you are considering college, graduate school, or professional school in the near future, it is worth your time to consider the best student loans for your circumstances. Even if you have the means to pay for part or most of your education.

What Are the Best Student Loans for Me?

money and graduation cap on a table

The best student loans for your situation may be entirely different than your friend or relative who has already attended school. Consider which type of program you will attend, whether it is your first time going to college or your second graduate degree. Also consider how much money you need to borrow to get started.

Once you have decided to apply for a student loan, it’s time to look at your options.

Student loans typically fall into two categories: public and private. Learn more about both as well as how credit scores and past experiences with lenders may factor into your choice.

Federal Loans

When most people talk about the best student loans, they are likely referencing federal loans. These loans are given by the government and can vary widely in amount.

For example, you may only take out a loan of $3,500 to pay for a semester’s worth of classes, or you could use graduate loans or parent loans to cover the entire cost of your education. To secure a federal student loan, you do not need a good credit score — in fact, your credit score will not even be checked.

There are certain eligibility requirements you must meet to be considered for a federal loan. A few non-negotiable items are:

  • Be a citizen of the United States with a Social Security number (or someone with granted eligibility status such as a permanent resident, international student, or refugee)
  • Enroll in school for at least half-time (if you are considering a direct loan)
  • Receive good grades (this is determined by the school)
  • Can prove that you need financial assistance (for certain types of loans)

Federal loans offer many advantages that are impossible with most private loans. They generally come with many options for repayment including income-driven repayment — for example, you may pay only 10% of your monthly income — and loan forgiveness for certain occupations.

If you plan to be a teacher, healthcare worker, or government employee, looking into federal loans is worth it simply for the loan forgiveness option. 

Private Student Loans

Private loans are similar to federal loans in the sense that you will secure money for school, but their terms are fundamentally very different. Their interest rates may be much higher, and you may not get the flexibility of choosing different payoff plans after you’ve completed your schooling. However, there are several benefits to the best loans in the private sector:

  • Interest may be tax-deductible.
  • Future refinancing (for lower interest rates) may be possible.
  • Rewards for great credit can get you a lower interest rate.

As you may guess, if you have no credit history, are an international student, or have poor credit, private loans may not be the best student loans for you. If you have a great credit score, you may be able to secure a great private loan with a lower interest rate.

Another major benefit of private loans is that if you have worked with the lender before, possibly for a mortgage, auto, or business loan, you may be able to secure a lower fixed rate due to your relationship with the lender.

Do I Need To Have Good Credit To Secure the Best Student Loans?

You do not need to have a good credit score or any type of lending history to apply for a federal loan. It’s possible your credit score will probably not even be considered during the application process. This does not mean that you don’t need to make a plan for paying it back, though.

Only take out as much money as you need for school, and no more. For private loans, how much your credit score matters depends on the specific lender’s requirements.

How Large of a Loan Should I Ask For?

Consider your future salary when you make a plan for the best student loans you’ve found as well. A teaching degree with a hefty price tag may not earn you enough of a salary to pay it back as quickly.

On the other hand, a degree with the potential for higher earnings, such as law or medicine, may enable you to confidently take out a larger loan in order to pay for school.

If you plan to apply for a private loan, lenders will certainly check your credit as this process is similar to any other loan. Future students can start building their credit history by applying for a private loan. Those who wish to buy a house or car in the future should carefully consider this option. If you cannot pay back a private loan, this will negatively affect your credit score.

A low credit score (under 600) can affect your future in terms of mortgages, auto loans, or small business loans.

What Can I Use Student Loan Money For?

In general, you should use student loan money only for the cost of tuition, books, school supplies, and room and board (if you are going to be living on campus). You may also wish to use some of the money to pay for an off-campus apartment. In some cases, you can pay for childcare costs with student loan money as well.

It’s always best to ask your lender if you have questions. Be sure that you understand the specifications before you make a large purchase. Or before you pay for something that you aren’t sure is covered with the money.

Learn More

Starting the loan application process can be nerve-wracking — especially if you’ve never even applied to college before. Learn more about the best student loans and understand how your credit score and total debt may be affected with Fiscal Tiger’s expert guides

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