Ash The Great | Oct 31, 2017 | 0
How To Get A Student Loan Without A Credit Check
Having no credit history is almost as bad as having a poor credit history (almost). At least if you have a poor credit rating, then creditors have an idea of just how unreliable you are, but if you have no credit rating, they know nothing about you. You could be the world’s biggest flake and debt scammer. In most cases, students have no credit history, so why bother running a credit check on them when they apply for a student loan?
If you are overly worried about your lack of a credit history, then do not worry so much. If you are worried about credit checks when you apply for a student loan, then you are worrying needlessly. Federal loans are explained in detail below, and they do not require a credit check. As it says above, if most students don’t even have a credit history, then what is the point in federal lenders checking their credit history?
You should protect your credit rating at all costs because a bad one will do you no favors. You can protect it as a student by staying away from all forms of debt. If you are applying for a student loan, you should maintain a good credit rating, or stick to having no credit history at all by avoiding debt at all costs.
No Credit Check Federal Loans
There are federal grants, there are federal scholarships, there are private scholarships, private loans, and the U.S. Federal Government program called “Direct Student Loans.” There are actually more ways to finance your education than these, such as parent Plus deals and so forth, but this article deals with federal loans that do not require a credit check. For a Direct student loan such as a federal loan, you do not need a good credit rating because the money comes directly from the US taxpayer.
Are Federal Student Loans Good Or Bad For US Taxpayers?
In theory, federal student loans (direct student loans) are a fantastic idea. The plan was that a student gets a loan, the student graduates, gets a great job, and pays the loan back with interest. In that scenario, everybody wins. The student gets a qualification and a good job, and the taxpayers see a return on their investment through the interest that the graduate pays.
Sadly, that is not the way it works. Federal student loans are very easy to get. It has now gotten to the point where almost anybody can get one.
Students start college and drop out, or students do not get a good job and they do not pay back their loans. Even students that graduate can avoid paying their loans back by having a poorly paid job for 20 years, after which point the debt is wiped.
There is a massive debt bubble because student loans are so easy to get. They are so easy to get that colleges and universities have increased their fees by a tremendous amount over the last twenty years. Students are typically in tens of thousands of dollars of debt for a qualification that should have cost them 20% – 40% of what they paid.
These huge loans are not repaid, which is bad for the US taxpayer. If the loans are repaid, then the poor graduates have to spend years paying back their debts. High student debts such as the ones students have today are taking longer and longer to repay. This means that students have to put their plans for wealth building, house buying, family starting and investing plans on hold while they pay off their debts. In cases where graduates get an average or below average paying job, they are actually far worse off than people who started work at a teen and never went to college because they have not had as long to earn, save and build wealth.
Getting A Federal Student Loan
You first need to apply for financial aid. Some parents save for their child’s education, which means the child may not be able to apply for a loan. The child also avoids having a mortgage-sized debt for a degree.
You have to apply to the FAFSA and complete their application for federal aid. Your family will be expected to contribute to your education, and the amount they contribute will depend upon how much they earn.
They Determine Your EFC
Your EFC is the amount that your family is expected to contribute (Expected Family Contribution). This amount is determined before your case is moved over to SAR.
They Make Your SAR
Your SAR is your Student Aid Report, and it gives details on your specific case. This report is sent over to the colleges that you have picked, and it is they who figure out how much aid they think you are able to receive, which includes your student loans.
Student Aid Packages
Any form of grant or loan is considered student aid. If you are able to get your hands on any government grants at this point, then it may save you a bundle later in life.
Exhaust Grants To Receive A Loan
Usually, you are only offered a long-term low-interest loan from the federal government if you have applied for grants and you have either received them or you have been turned down. In other words, they want to see if you can get the money for free before you apply for a federal loan.
Direct Loans Are Federal Loans
You may hear them referred to as Stafford Loans or William D. Ford Federal Direct Loans. These are loans that are subsidized by the government, which is why they have such low interest rates. There are two types of Direct loan that may apply to you.
Direct Subsidized Loans
These are for students with the highest financial need. These are for students that simply cannot afford to pay for college and cannot afford the debt that college creates. The government will pay the interest on these loans, which really sticks it to the taxpayer, but the plan is that the qualification will make the applicant more employable, which means he or she is less likely to spend his or her life on government benefits.
Most subsidized loans will have the federal government pay the interest on the loan, but they may only pay it for a six-month grace period after you graduate. After that point, you are expected to pay for the loan and the interest it accrues. Students are not expected to start repaying the loan until after they finish their education.
Direct Unsubsidized Loans
With this type of loan, you simply have to be an undergraduate or a graduate. There are very few hoops to jump through. You do not have to prove that you have financial hardship; you only have to prove that you are a full-time student attending a college or university, or a half-time student who hasn’t taken on full-time workloads. The borrower has to make the loan repayments and pay the loan interest after he or she graduates. If you cannot get a grant or scholarship, then this is probably the direct loan you will receive. Typically, only US citizens are able to get federal loans, but a non-US citizen may be able to get a federal loan if he or she is studying in a US college/university and/or he/she has a US citizen as a co-signer.
Conclusion – Why Haven’t We Gone Into Great Detail?
There are two main reasons why this article goes into detail, but why it doesn’t go into pages and pages of detail.
The first reason is that every president seems to change federal loan rules and procedure in one way or another, and they all seem to do it at least once during their stay. There is no telling how long the information would remain accurate if we were to explain every detail. The information would need updating far too regularly.
For example, if you look around the Internet right now, you will find recent websites that say loan forgiveness occurs after 25 years, when actually it occurs after 20 years.
For example, you will see Ford Direct loans called Stafford loans. You will see interest rates that are just wrong, and you will see Perkins loan information about family income that is out of date since the last government budget was released.
The second reason why we didn’t go into great detail about the application process is because much of the information we give you on how to apply is redundant because the FAFSA website takes you through the process so aptly. If you are going to apply, then I strongly suggest you ignore what online articles tell you about the application process and you simply start the step-by-step process on the FAFSA website.
Now that you know all about student loan credit ratings, the types of loans you can get, how the process works, how it affects you, how it affects the US taxpayer, and the potential benefits of a federal loan, you can apply via the FAFSA website with a clear direction and confident attitude.