Student Loan Options for Parents With Bad Credit

Student loan lenders typically rely on credit history to assess risk, which can make borrowing more difficult for parents with bad credit.

"A poor credit score can adversely impact a parent's ability to get access to student loans for their child," explains Clifford Cornell, a financial adviser at Bone Fide Wealth, LLC. "This is one of the main factors in lending."

While a bad credit score narrows the options, it doesn’t eliminate them altogether. Federal parent PLUS loans don’t have a minimum credit score requirement, and private loans may still be attainable with a qualified cosigner.

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Federal parent PLUS loans

Parent PLUS loans are federal loans available to parents of dependent undergraduate students. For loans disbursed on or after July 1, 2026, parents can borrow up to $20,000 per year for each child, with a lifetime limit of $65,000 per child.

You don’t need a minimum credit score to qualify for a parent PLUS loan. However, the Department of Education will check your credit for an adverse credit history, which can include certain recent delinquencies, collections, bankruptcies, foreclosures, wage garnishments, or tax liens. This credit check is different from the underwriting used for mortgages, auto loans, and most private loans.

Parent PLUS loans disbursed on or after July 1, 2026, aren’t eligible for income-driven repayment or federal loan forgiveness programs. However, they still offer certain federal protections, including deferment and forbearance options that may not be available with private loans.

What to do if you’re denied a federal PLUS loan

If your parent PLUS loan application is denied because of adverse credit, you still have a few options:

• Ask about additional unsubsidized loans: Your child may qualify for the higher Direct Unsubsidized Loan limits normally available to independent students. Contact the school’s financial aid office to see how much additional funding is available. 
• Appeal the decision: If the denial was based on incorrect, outdated, or incomplete credit information, or you have other extenuating circumstances, you can ask the Department of Education to reconsider. You’ll need to provide supporting documentation and complete PLUS credit counseling if your appeal is approved.
• Apply with an endorser: You may still qualify if you add an endorser who doesn’t have an adverse credit history. The endorser is the equivalent of a cosigner on a private loan and agrees to repay it if you don’t. The student you’re borrowing for cannot also be the endorser.

Private student loans

Private student loans can help cover remaining college costs after your child has used their federal grants, scholarships, and student loan options.

Approval is typically based on credit and income, so qualifying can be difficult if you have bad credit. Some lenders may require a cosigner with stronger credit, while others may offer loans directly to the student if they can qualify on their own.

Your credit also affects the interest rate you receive. Borrowers with credit scores of 780 or higher generally qualify for lower rates than the 9.07% federal parent PLUS loan rate for the 2026-27 academic year. Borrowers with lower scores, however, may face higher rates or have a harder time qualifying.

The chart below shows the average interest rates by credit score for borrowers who used the Credible marketplace to find a private student loan.

What to do if you’re denied a private student loan

Depending on your situation, you may be able to improve your chances of qualifying or get a better rate by taking one of these steps:

• Apply with a cosigner: Adding a cosigner with strong credit may improve your chances of approval and help you qualify for a lower rate. Borrowers who applied with a cosigner through Credible between January and July 2026 received APRs more than 2 percentage points lower on average than borrowers who applied alone. 
• Work on your credit: If you don’t need to borrow right away, improving your credit could make it easier to qualify later and potentially help you get a lower rate. Focus on paying bills on time, reducing credit card balances, and correcting any errors on your credit reports.

Other types of financial aid

Student loans aren’t the only form of financial aid you can use to cover the cost of your education. Other options include:

• Scholarships: You can get scholarships from sources like local businesses, community organizations, and your college. Scholarships don’t have to be repaid, and you can apply for as many as you want. You may qualify for scholarships based on factors such as your grades and extracurricular activities.
• Grants: This type of financial aid works similarly to scholarships, but grants are typically need-based. This means you must demonstrate financial need (having a low household income) to qualify. 
• Work-study: This federal program offers part-time jobs on or off campus to undergraduate and graduate students with financial need. If you receive a work-study award, you must apply and interview for jobs before you’re placed.
• Tuition reimbursement: Employers can offer up to $5,250 per year in tax-free tuition reimbursement to each employee. If your employer offers this program and you take college courses while working, your employer will pay you back for what you spend. This benefits employers by helping employees gain valuable skills, and employees don’t have to borrow money to pay for their education.