Families with Bad Credit Still Get Loans and Avoid Debt Relief

With rising college costs and the increasing importance of a degree, more and more students are finding themselves deeper and deeper in debt when they graduate and enter into the job pool. Other prospective college students find themselves wondering how they will even afford college. For parents with bad credit, securing loans seems like a daunting task. However, there are options for student loans even for families with a bad credit score rating, and expensive debt relief plans don't have to be part of the equation.

Getting Student Loans with Bad Credit

Many parents worry that they won't be able to obtain a student loan with bad credit. However, there are still options for these families to secure loans and ensure that their children are able to afford college. Parents with bad credit can apply for federal loans either in their name or in the name of the student. These federal loans do not require credit checks, so a bad credit score will not have any effect on the interest rates or the ability to be approved for a loan.

One of the most popular types of federal student loans is called a Stafford loan. In most cases, this involves the student actually taking the loan, with a bank or the federal government often serving as the lender. Another popular option for students whose families are really struggling financially is the Perkins loan. This type of loan is supplied by the college and funded by the government. The Perkins loan will not have any impact on the student's credit rating. These loans are both great options for any family lacking the funds to pay for college, and they are especially good for families suffering from credit problems.

Consolidating LoansOftentimes, students or families will need to take out more than one loan due to restrictions on the amount of any single type of loan. Students are able to combine these loans into a federal consolidation loan. This will allow them to make just one loan payment on a monthly basis. There are lending companies that do not evaluate credit scores when issuing these consolidated loans, so bad credit does not have to be an obstacle.

Even with loan consolidation, there are many people who default their loans or end up with delinquent loans. It is estimated that there are currently 37 million borrowers with outstanding student loans. With all of these outstanding loans, many student loan debt relief programs have popped up claiming that they will help students get out of their debt. Unfortunately, most of these programs attempt to mislead and confuse borrowers.

Avoiding the Trap of Debt Relief

With so many students suffering under mountains of debt, it may seem that debt relief for student loans would be a great option to help people get back on their feet. Unfortunately, recent reports indicate that many of these debt relief programs are traps that end up costing the borrower more. Many of these programs charge students over $1600 upfront for services they can get free from the federal government. The government has many tools in place to help students manage their loans. By visiting studentaid.gov, parents and students can find out more information and access these valuable tools.

Student loan borrowers who do default on their loans, meaning they fall behind by 90 days or more, face the risk of wage garnishing and damage to their credit scores. Rather than looking to the expensive debt relief programs, these borrowers should look to the federal assistance programs. It can be very tempting for borrowers to pay these upfront costs when they hear the promises of reduced payments. Luckily, students are becoming more aware of the free programs offered by the federal government.

Monitoring Credit with Student Loans

For borrowers who have defaulted or fallen behind on loans, it's very important to frequently monitor your credit to make sure you don't have a bad credit score rating. By enrolling in free federal programs and staying on top of your credit score, you can help make sure you are on the right financial path for the future.

With the importance of a degree growing almost as fast as tuition rates rise, all families need to have access to student loans. Regardless of bad credit, students can apply for and receive student loans. Thanks to many free government options, students can also avoid expensive debt relief programs down the road.

Amy Johnson is an active blogger who is fond of writing articles on Bad Credit Loans and advising people to get mortgage even with bad credit. Follow her on Twitter to know more on how students can avoid debt relief with free federal assistance.