How Adverse Credit Affects Federal Student Loans

When it comes to student loans (or loans of any sort, really), credit history plays a large role. Many college-bound students won’t have a significant credit history, and will require a co-signer in order for lenders to loan them money.

However, there are certain federal student loans that are geared more towards parents. Direct PLUS Loans, for example, will require a credit check. If the borrower’s credit history is adverse, they may have a harder time qualifying for the loan. Let’s break it down.

What is Adverse Credit?

Credit history is basically a report card of how well a person repays their debts and manages their money. Having bad or adverse credit is a warning flag to potential lenders that you may not handle their loan well. It’s a risk they may not want to take.

According to, adverse credit can include:

  • Bankruptcy
  • Voluntary surrender
  • Repossession
  • Foreclosure
  • Delinquent accounts
  • Wage garnishment
  • Defaulted loans
  • Defaulted contracts or leases
  • Tax lien

Typically these examples are taken into consideration if the infraction was within the last five years.

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What if I Have Adverse Credit?

If you have adverse credit, there are two options that can still earn you a federal student loan.

Get an Endorser

Similar to a cosigner, an endorser is someone who will back up your loan in case you’re unable to pay. The endorser can’t have adverse credit, and will undergo a credit check themselves.

Prove Extenuating Circumstances

If you can properly document extenuating circumstances relating to your adverse credit, you may still be eligible for certain federal loans. Examples of extenuating circumstances can include things like letters proving consecutive, full payments, or release deeds from vendors. You can find a more complete list of examples at the website here.


Lender Rates (APR) Eligibility
Sallie Mae logo.
1.13% - 11.23% Variable
3.50%- 12.60% Fixed
Undergraduate and Graduate
Credibe company logo.
0.99% - 11.99% Variable
2.94% - 12.99% Fixed
Undergraduate and Graduate
Lendkey company logo.
1.13% - 11.23% Variable
3.50% - 12.60% Fixed
Undergraduate and Graduate
Ascent company logo.
1.51% - 9.09% Variable
3.24% - 11.33% Fixed
Undergraduate and Graduate
College Ave company logo.
0.99% - 11.98% Variable
2.94% - 12.99% Fixed
Undergraduate and Graduate
2.93% - 5.67% Variable
4.35% - 7.15% Fixed
Undergraduate and Graduate
Earnest company logo.
0.99% - 11.44% Variable
2.94% - 12.78% Fixed
Undergraduate and Graduate
1.20% - 11.52% Variable
3.20% - 11.99% Fixed
Undergraduate and Graduate
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

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