Most young people who need a student loan have no credit history.This feels like Catch 22 – you need a loan because you have no money, but you can’t get one because you have no credit history.

The majority of US citizens are eligible for a government student loan if they are accepted for a college course and study at least half time. There are a few exceptions, which involve existing unpaid loans and drug convictions whilst in receipt of a loan.

Proof of financial need is necessary for students applying for subsidized loans, but is not needed for unsubsidized loans.

So, these loans are available to students who have no credit history. However, the problem that most students face is that the federal student loans have limits and this can mean that they are unable to borrow enough to pay all of their expenses while they are studying.

Alternatives loans can be taken out from private companies and many students have to do this in order to borrow the amount of money they actually need, but these usually require a credit history. Continue reading →