Hope is not lost for parents with bad credit or even no credit. There are several alternatives parents can take to help their students pay for college.

 

Start with federal student loans. Unsubsidized and subsidized federal loans, the two main types of student loans, do not require credit checks. Fill out the FAFSA to apply for federal student loans as well as free aids, grants, scholarships, and work-study. Federal student loans also offer lower interest rates and come with income-driven repayment plans and forgiveness programs. But federal loans do have borrowing limits, and if need be parents may have to look into private loans to fill in the gaps.

 

Find a co-signer with good credit. In order to borrow private loans with a co-signer, they’ll need to have a good credit score and a steady income. With a co-signer, parents may be eligible to apply for Federal Parent PLUS loans, another option to help pay for college, but credit checks are required. The co-signer with then be responsible for the accumulated debt if the parent or the student can’t repay it.

 

Apply for grants and scholarships. This is known as “free money”, meaning the parent and the student aren’t required to pay the money back. Websites such as Unigo.com, Scholarships.com, and Cappex.com can help you find grant and scholarship opportunities. Students can also contact their guidance counselor for information about grants and scholarships.

 

Think about the future. When looking into private loan options, opt for a fixed or low-interest rate, if possible. Remember to compare offers to get the lowest interest rate you qualify for. Given the choice, a fixed interest rate is a safer bet than a variable interest rate, as it won’t increase over time. Look for any prepayments, late fees, or extra costs. Note whether the lender will postpone payments in case there are difficulties in affording them. Lastly, use a student loan calculator to see what kind of payments you’ll make to make in the coming years.

 

Consider refinancing. Once you’re out of school and have built a credit profile, you may be able to refinance private student loans to a lower interest rate. You’ll most likely require a solid income, a credit score of 690 or higher and a history of on-time debt payments.