by Laura Sharp

Created on: May 01, 2008

So, you know you need a college degree to make more money, but you don't have money to pay for the degree. You've heard people talk about student loans, but your credit sucks, so you don't think you can get a loan.

Lucky for you, the Federal Financial Aid Program is not at all credit-based. Yes, you read that right. Federal Financial Aid, or Title IV funding, can provide you with a student loan without ever pulling a credit report.

These loans are backed by the government, and as a general rule, as long as you meet the below requirements, you should be eligible for a loan:
1. You've filed taxes (if you were required to do so).
2. You've never defaulted on a student loan (or if you did default, you've cleared the default with your lender).
3. You've never been convicted of a drug felony (or, if you have, you've either completed an acceptable rehab program or have allowed enough time to elapse since your conviction that you're now eligible).
4. You are an "eligible non-citizen" (if you are not a US Citizen).

While there are a few other kinks that you may run in to (such as exceeding the maximum lifetime limit of student loans), these are the "biggies" that will prevent you from federal funding. Notice that credit is not listed.

Regardless of credit, the government provides student loans at the below levels:
Undergraduate students with 0 - 24 college credits: $7500 per year
Undergraduate students with 24 - 47 college credits: $8500 per year
Undergraduate students with 48+ college credits: $10,500 per year
Graduate students: $20,500 per year

These rates are as of the 2007-2008 school year (July 1, 2007 - June 30, 2008). During this aid year, the loan interest rates are fixed at 6.8% - not bad for a non-credit based loan! You will want to investigate the lenders available for your loan to find out more detailed information about origination fees and repayment options. While origination fees may vary, most federal student loans will defer your repayment until you've been out of attendance for 6 months, and typically, you should have 10 years to pay off the loans.

Bad credit should no longer hinder you in going to school. Contact an admissions or financial aid counselor at a local college for more specifics on your situation.

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