Since bank loans often require a borrower to have a good credit score and many students straight out of high school don't have a credit history, most banks require a co-signer, according to Simple Tuition. A co-signer must have good credit and agree to financial liability for the loan in the event of default. While terms and conditions vary among lenders, the best loan terms are awarded to those with the highest credit scores.
There are other options available for students with no credit or poor credit who cannot find a co-signer. Thought it may still be possible to find a bank willing to lend so such an individual, these loans often come with high interest rates and origination fees. Students should first exhaust all federal aid options, including the Perkins loan, Stafford loan, Grad Plus loan and the Parent Plus loan, Simple Tuition advises. Applying for one of these loans begins with a Free Application for Federal Student Aid application to determine eligibility. They are specifically designed with students in mind and do not require a co-signer or credit check.
Grants are another option, notes Simple Tuition. Grants are typically need-based, and this money can used to cover educational expenses and does not have to be paid back.