Federal Student Loans

Federal Student Loans Archives - Sparrow Nest

Financial Wellness

Financial Wellness Archives - Sparrow Nest

Private Student Loans

Private Student Loans Archives - Sparrow Nest

<p class="has-text-align-left"><em>&#8220;Can I get a student loan even though I have bad credit?&#8221;</em></p>
<p>The simple answer: yes. The more complicated answer: welllll, yes, but it’s going to be trickier.</p>
<p>While most federal student loans don’t require you to have a good credit score, or any credit at all, most <a href="https://www.sparrowfi.com/">private student loans</a>, on the other hand, do. If you’re worried about your poor credit score preventing you from being able to pay for college, don’t fret. While it may be more difficult, it isn’t entirely impossible.</p>
<p>Here’s what you can do to get a student loan with bad credit.</p>
<p>&gt;&gt; <strong>MORE:</strong> <a href="https://www.sparrowfi.com/undergrad-student-loan">Compare student loan rates from 17+ lenders</a></p>


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<h2 class="wp-block-heading"><strong>What is Considered Bad Credit?</strong></h2>
<p>Generally speaking, you will need a credit score of at least 670 or higher to qualify with most private lenders. That said, what each individual lender considers “bad” credit will vary. And, there are several lenders that work with borrowers with lower credit scores.</p>
<p>It&#8217;s important to note that most private lenders use the FICO credit scoring model. The FICO scale uses a range of 300-850 to measure creditworthiness, so the closer you are to 850 the better.</p>
<p><strong>&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">What credit score is needed for a student loan?</a></p>
<p><img loading="lazy" decoding="async" class="" src="https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1024x576.png" alt="This image has an empty alt attribute; its file name is Blog-Imagery-1024x576.png" width="768" height="432" /></p>


<h3 class="wp-block-heading"><strong>Can You Get a Student Loan with Bad Credit</strong>?</h3>
<p>Yes. Regardless of which student loan type you choose, whether federal or private, there are options for borrowers with bad credit.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/how-to-remove-student-loans-from-your-credit-report">How to remove student loans from your credit report</a></p>


<h2 id="h-best-private-student-loans-for-bad-credit" class="wp-block-heading"><strong>Best Private Student Loans for Bad Credit</strong></h2>
<p>First, here&#8217;s is a list of the top 5 student loans for bad credit. Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/">student loan search tool</a>. After you complete the free <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>, we’ll show you the rates and terms you’d qualify for with 17+ premier lenders.</p>


<h3><strong><a href="https://asla.accountcenter.studentloan.org/inschool/welcome?ref=arspar&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=spar-is&amp;qfid=affiliate-000-000">Arkansas Student Loan Authority</a></strong></h3>
<p>The Arkansas Student Loan Authority (ASLA) is an Arkansas state entity that provides educational funding for all Arkansas students who wish to attend higher education institutions. ASLA has a minimum credit score requirement of 670. ASLA is a great option for Arkansas students.</p>


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<h3><strong><a href="https://www.ascentfunding.com/college-loans/sparrow/?utm_source=partner&amp;utm_medium=sparrowfi_rev_learn_subid--affiliate-000-000">Ascent</a> </strong></h3>
<p><a href="https://www.ascentfunding.com/college-loans/sparrow/?utm_source=partner&amp;utm_medium=sparrowfi_rev_learn_subid--affiliate-000-000">Ascent</a> is an online lender that offers educational funding for students. They offer three types of student loans: a traditional cosigned loan, a non-cosigned credit-based loan, and a non-cosigned outcomes-based loan. Collectively, the three options provide a great selection for those who do not have a cosigner available, are international or DACA students, or have lower credit scores. Ascent’s minimum credit requirement varies based on the loan.</p>


<h3><strong><a href="https://studentloans.com/?mc=0000009i">Brazos</a></strong></h3>
<p>Brazos is a non-profit lender offering educational funding through private student loans available only to Texas Residents. They offer a wide range of loan options, covering undergraduate, graduate, MBA, law, medical, dental, veterinary, and doctoral degree programs. Brazos does not disclose their minimum credit requirement. Brazos is a great option if you live in Texas and want competitive interest rates.</p>


<h3><strong><a href="https://www.collegeavestudentloans.com/application/?SC=CAIS01&amp;ACT=US&amp;utm_campaign=affiliate%20ongoing&amp;utm_source=sparrow&amp;utm_medium=aggregator&amp;utm_content=apply&amp;brand=college%20ave&amp;product=inschool&amp;p_aff=sparrow&amp;goal=acquisition&amp;agg_ref_id=affiliate-000-000">College Ave Student Loans</a></strong></h3>
<p>College Ave Student Loans offers educational funding for undergraduate, graduate, professional, and career school students, and parents of students. To qualify for a student loan with College Ave, you will need a credit score in the mid-600s. College Ave is a great option if you are seeking a more flexible repayment term that allows you to find a loan that matches your budget.</p>


<h3><strong><a href="https://www.earnest.com/student-loans?utm_source=sparrow&amp;utm_medium=referral&amp;utm_content=affiliate-000-000&amp;redirect_event=true&amp;b=sparrowslo1365">Earnest</a></strong></h3>
<p><a href="https://www.earnest.com/student-loans?utm_source=sparrow&amp;utm_medium=referral&amp;utm_content=affiliate-000-000&amp;redirect_event=true&amp;b=sparrowslo1365">Earnest’s student loans</a> provide funding to undergraduate, graduate, and professional students. Earnest has a minimum credit score requirement of 650. They’re a great option if you are seeking competitive interest rates, unique borrower perks, and flexible repayment options that allow you to find a loan that matches your budget.</p>


<h3><strong><a href="https://student.edly.co/?utm_source=sparrow&amp;utm_campaign=affiliate-000-000">Edly</a></strong></h3>
<p><a href="https://student.edly.co/?utm_source=sparrow&amp;utm_campaign=affiliate-000-000">Edly Income-Based Repayment (IBR) Student Loans</a>, originated by Edly’s partner FinWise Bank, provide an alternative loan option for students. Students who are approved for an Edly student loan will not have to make payments while in school. Instead, borrowers make payments after graduation based on their income. Due to the structure of IBR loans, borrowers have a variety of benefits when it comes to repayment. An Edly IBR loan is best if you are seeking a loan option with no cosigner, competitive repayment terms, and flexible repayment options.</p>


<h3><strong><a href="https://www.funding-u.com/no-cosigner-student-loans">Funding U</a></strong></h3>
<p><a href="https://www.funding-u.com/no-cosigner-student-loans">Funding U</a> is an online lender that focuses exclusively on undergraduate students with no cosigner. Rather than looking at your credit score or income, Funding U looks at non-traditional metrics such as your school, major, GPA and estimated future earnings to assess your creditworthiness. Funding U’s student loan is best if you are a high-achieving undergraduate student with limited credit history and no access to a creditworthy cosigner.</p>


<h3><strong><a href="https://www.lendkey.com/partner-psl/?clickid=VQgziE01AxyPWbPUtF1bfymMUkFxkz01uyj13s0&amp;irgwc=1&amp;sk=AFF-Sparrow">LendKey</a></strong></h3>
<p><a href="abouthttps://www.lendkey.com/partner-psl/?clickid=VQgziE01AxyPWbPUtF1bfymMUkFxkz01uyj13s0&amp;irgwc=1&amp;sk=AFF-Sparrow">LendKey</a> is an institution that offers educational funding to undergraduate and graduate students. By connecting borrowers with a network of 100+ lesser-known credit unions and community banks, LendKey allows you to work with smaller lenders with low rates and good customer service, rather than traditional lending institutions. LendKey has a minimum credit requirement of 660. It’s best for students who want generous cosigner release and forbearance policies.</p>


<h3><strong><a href="https://mpowerfinancing.com/get-a-loan?utm_source=sparrowfi&amp;utm_medium=link&amp;utm_term=website&amp;utm_content=lender-box&amp;sub_id=affiliate-000-000">MPOWER</a></strong></h3>
<p><a href="https://mpowerfinancing.com/get-a-loan?utm_source=sparrowfi&amp;utm_medium=link&amp;utm_term=website&amp;utm_content=lender-box&amp;sub_id=affiliate-000-000">MPOWER</a> is an online lender that offers educational funding to international, domestic, and DACA students. They offer non-cosigned undergraduate and graduate student loans. It is best for international students and DACA students who don’t have a credit history and can’t access a qualified cosigner.</p>


<h2 id="federal-loans" class="wp-block-heading"><strong>Can You Get Federal Student Loans with Bad Credit?</strong></h2>
<p>Most <a href="https://wordpress.sparrowfi.com/category/federal-student-loans/">federal student loans</a> don’t require you to have a good credit score (or any credit at all). They also tend to have lower interest rates and better terms and conditions. These qualities make them a great place to start when thinking about financing your college education.</p>
<p>There are four main types of federal student loans, three of which do not require a credit check or a high credit score to qualify.</p>


<h3 class="wp-block-heading"><strong>Federal Loans that Don’t Require a Credit Check</strong></h3>
<h4 class="wp-block-heading"><strong>Direct Subsidized Loans</strong></h4>
<p>Direct Subsidized Loans are available only to undergraduate students who demonstrate financial need. This means that you may not qualify for Direct Subsidized Loans.</p>
<p>If you do, the government will pay the interest on your <a href="https://www.sparrowfi.com/blog/the-difference-between-subsidized-and-unsubsidized-loans">Direct Subsidized Loans</a> while you are in school. Once you graduate, you’ll be in charge of paying them back, interest included.</p>
<h4 class="wp-block-heading"><strong>Direct Unsubsidized Loans</strong></h4>
<p>Direct Unsubsidized Loans are available to both undergraduate and graduate students, and you do not need to prove financial need to qualify. However, while in school, the government does <em>not </em>pay interest on these loans. So, while you’re hitting the books, interest will be accumulating in the meantime.</p>
<h4 class="wp-block-heading"><strong>Direct Consolidation Loans</strong></h4>
<p>Direct Consolidation Loans allow you to combine more than one federal loan into one. So, if you have several federal loans and want to simplify your payments, you can combine them into one singular loan, and thus, one singular payment. When you <a href="https://www.sparrowfi.com/blog/how-to-consolidate-student-loans-with-bad-credit">consolidate</a>, your new interest rate is the average of your previous loans’ interest rates.</p>


<h3 class="wp-block-heading"><strong>Federal Loans That Do Require a Credit Check</strong></h3>
<h4 class="wp-block-heading"><strong>Direct PLUS Loans</strong></h4>
<p>Direct PLUS Loans are available to graduate/professional students and parents of students. Like Unsubsidized Loans, you will be responsible for any interest that accrues, even while in school. However, unlike all other federal loan types, <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">Direct PLUS Loans</a> <em>do </em>require an adverse credit check.</p>
<p>While the credit check process could be a bummer if you have bad credit, there is hope if you don’t pass it. Adding a creditworthy endorser to the loan may allow you to qualify.</p>


<h3 class="wp-block-heading"><strong>How to Get Federal Loans with Bad Credit</strong></h3>
<p>In order to get federal aid, you need to fill out the Free Application for Federal Student Aid (<a href="https://www.sparrowfi.com/blog/6-simple-steps-to-fill-out-fafsa">FAFSA</a>). This form will ask you to provide information regarding you and your family’s financial situation to determine your eligibility for aid, but it will not run a credit check as part of that evaluation.</p>
<p><strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/most-common-fafsa-errors-to-avoid-when-applying">Most common FAFSA application errors to avoid</a></p>
<p>It’s important to note that you don’t have to accept all the federal aid that you qualify for. You should always consider the terms and conditions and think about what makes most sense for you and your educational journey.</p>
<p>While federal loans <em>do </em>tend to be a better choice in comparison to private student loans, they won’t <em>always </em>be best. There’s a variety of different <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">financial aid options for students</a>, so make sure you understand what they all are and what they all mean before agreeing to one.</p>
<p><strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">What are 4 types of financial aid for college?</a></p>


<h2 id="private-loans" class="wp-block-heading"><strong>Refinancing Student Loans with Bad Credit</strong></h2>
<p>The goal of student loan refinancing is typically to score a lower interest rate or monthly payment, saving you money in the long run. If you have a bad credit score, it may be challenging to secure a lower rate than what you currently have.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/student-loan-refi">Compare student loan refinance rates from 17+ lenders</a></p>
<p>Before refinancing, ask yourself the following questions:</p>
<ol>
<li>Has your credit score improved since you took out the loan you currently have?</li>
<li>Are you paying a high interest rate on your current loan? Do you believe you could secure a lower interest rate based on the market?</li>
</ol>
<p>If you answered yes to either of these questions, then refinancing may be a good option for you.</p>
<p>&gt;&gt; <strong>MORE: </strong><a href="https://www.sparrowfi.com/blog/should-i-refinance-my-student-loans">Should I refinance my student loans</a></p>


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<h2 class="wp-block-heading"><strong>Best Refinance Loans for Bad Credit</strong></h2>
<p>Here is a list of the top refinance loan companies for bad credit. In just three minutes, you can compare real and personalized student loan refinancing rates from 17+ lenders &#8211; for free &#8211; by using the <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>.</p>


<h3><strong><a href="https://asla.accountcenter.studentloan.org/refinance/default/welcome?ref=arspar&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=spar-refi&amp;qfid=affiliate-000-000">Arkansas Student Loan Authority</a></strong></h3>
<p><a href="https://asla.accountcenter.studentloan.org/refinance/default/welcome?ref=arspar&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=spar-refi&amp;qfid=affiliate-000-000">The Arkansas Student Loan Authority (ASLA)</a> is an Arkansas state entity that provides student loan refinancing for Arkansas residents. ASLA has a minimum credit score requirement of 670.</p>


<h3><strong><a href="https://www.collegeavestudentloans.com/application/?SC=CARF01&amp;ACT=US&amp;utm_campaign=affiliate%20ongoing&amp;utm_source=sparrow&amp;utm_medium=aggregator&amp;utm_content=apply&amp;brand=college%20ave&amp;product=refi&amp;p_aff=sparrow&amp;goal=acquisition&amp;agg_ref_id=affiliate-000-000">College Ave Student Loans</a></strong></h3>
<p><a href="https://www.collegeavestudentloans.com/application/?SC=CARF01&amp;ACT=US&amp;utm_campaign=affiliate%20ongoing&amp;utm_source=sparrow&amp;utm_medium=aggregator&amp;utm_content=apply&amp;brand=college%20ave&amp;product=refi&amp;p_aff=sparrow&amp;goal=acquisition&amp;agg_ref_id=affiliate-000-000">College Ave</a> offers student loan refinancing with competitive rates, flexible repayment terms, and strong customer service. Their student loan refinance offering is best if you are seeking a more flexible repayment term that allows you to find a loan that matches your budget. To qualify for a refinance loan with College Ave, you will need a credit score in the mid-600s.</p>


<h3><strong><a href="https://www.iowastudentloan.org/refinance-loan/student-loan.aspx?ref=SPAR&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=reset&amp;campaign=sparrow">ISL Education Lending</a></strong></h3>
<p><a href="https://www.iowastudentloan.org/refinance-loan/student-loan.aspx?ref=SPAR&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=reset&amp;campaign=sparrow">ISL</a> is a nonprofit lender that offers both private student loans and student loan refinancing. ISL’s student loan refinancing is best if you haven’t graduated and want generous forbearance policies. ISL has a minimum credit score of 670.</p>


<h3><strong><a href="https://www.sofi.com/signup/landing-register/isl?clickId=2dNXuI0-ixyPTzwWKR1aoR6KUkF2Wg1E6ykZRU0&amp;irgwc=1&amp;adId=846867&amp;adName=SoFi%20Private%20Student%20Loan&amp;partnerId=2776865&amp;partnerName=Sparrow&amp;adTarget=inschool&amp;partnerType=Affiliate&amp;adDepartment=BD&amp;sharedId=&amp;ami=&amp;programId=11190&amp;experiment=isl-merge-page-v5&amp;variant=control&amp;utm_source=impact&amp;utm_medium=affiliates&amp;utm_campaign=SoFi%20Private%20Student%20Loan">SoFi</a></strong></h3>
<p><a href="https://www.sofi.com/signup/landing-register/isl?clickId=2dNXuI0-ixyPTzwWKR1aoR6KUkF2Wg1E6ykZRU0&amp;irgwc=1&amp;adId=846867&amp;adName=SoFi%20Private%20Student%20Loan&amp;partnerId=2776865&amp;partnerName=Sparrow&amp;adTarget=inschool&amp;partnerType=Affiliate&amp;adDepartment=BD&amp;sharedId=&amp;ami=&amp;programId=11190&amp;experiment=isl-merge-page-v5&amp;variant=control&amp;utm_source=impact&amp;utm_medium=affiliates&amp;utm_campaign=SoFi%20Private%20Student%20Loan">SoFi</a> is one of the largest student loan refinance companies in the industry. With competitive interest rates, a diverse set of repayment options, and exclusive member benefits, SoFi is a good fit for borrowers with an associate’s degree or higher or borrowers with a high income. SoFi has a minimum credit score of 650.</p>


<h2 id="what-to-do-if-denied" class="wp-block-heading"><strong>What to Do if You Were Denied a Student Loan Due to Bad Credit</strong></h2>
<p>If you were initially denied a private student loan due to poor credit, your best bet is to look for a <a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">creditworthy cosigner</a>. A cosigner is someone who agrees to sign onto the loan. In doing so, they agree that if the borrower fails to repay the loan, the cosigner will take responsibility for paying it back.</p>
<p>&gt;&gt; <strong>MORE: </strong><a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">What is a private student loan cosigner?</a></p>
<p>Having a cosigner is valuable because their credit score will be factored into the lender’s decision to work with you, which can also help you secure a better interest rate and terms. So, if your credit score isn’t up to par but theirs is, you may be in luck.</p>
<p>Make sure you don’t pick just anyone to cosign unless you really, <em>really</em> have to. Make sure to find someone that is creditworthy and has a history of managing their finances effectively. Additionally, always make sure to have open conversations with whoever you choose before they agree to cosign. Explain the pros and cons of being a cosigner and what impact it could have for them. Discussing expectations around repaying the loan is also important so your cosigner knows what to expect.</p>
<p><strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/can-you-get-an-international-student-loan-without-a-cosigner">Can you get an international student loan without a cosigner?</a></p>


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<h2 id="credit-tips" class="wp-block-heading"><strong>Tips for Improving Your Credit</strong></h2>
<p>Improving your credit score won’t happen overnight, but it is worthwhile to take any steps you can throughout the loan process to boost your credit.</p>
<p>Here’s a few tips to help get your credit score in check.</p>


<h3 class="wp-block-heading"><strong>Stay Aware of How Much Debt You’re Taking On</strong></h3>
<p>Your credit score is calculated based on a variety of factors, one being your payment history. In fact, your payment history is the most important part of your credit score, making up 35% of the calculation.</p>
<p></p>
<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" class="wp-image-2224" src="https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-1024x576.png" alt="" width="768" height="432" srcset="https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-1024x576.png 1024w, https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-300x169.png 300w, https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-768x432.png 768w, https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-1536x864.png 1536w, https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-2048x1152.png 2048w, https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-1568x882.png 1568w" sizes="auto, (max-width: 768px) 100vw, 768px" /></figure>
<p></p>
<p>When you take on debt, such as student loans, you are doing so with the understanding that that money will be paid back and paid on time. If you make consistent, on-time payments, it’s good for your credit, as it demonstrates an ability to pay back debts successfully. If you pay late or miss payments, it could hurt your credit, as it demonstrates an inability to pay back debts successfully.</p>
<p>&gt;&gt; <strong>MORE</strong>: <a href="https://www.sparrowfi.com/blog/the-most-effective-debt-payoff-strategy-you-need-to-know">Most effective debt-payoff strategy</a></p>

<p>While this may sound like a no-brainer, you’ll want to be aware of how much debt you’re taking on. If you take on too much, it could make you more likely to miss a payment or go into loan default.</p>
<p>Remember to be realistic about how much you will be able to afford in monthly payments. Utilizing a <a href="https://smartasset.com/student-loans/student-loan-calculator#quE69fe79Y">student loan calculator</a> to estimate your monthly loan payments after graduation is a great way to get real about whether the loan will be feasible when repayment starts. Let’s use an example here.</p>
<p>Let’s say you’re studying to be a public school teacher, and you land a job making $50,000 a year after graduation. This would land you around $4,200 per month (if we round up) to budget with. <em>(For the ease of this example, we aren’t factoring in taxes.)</em></p>
<p>Now, let’s say your monthly expenses are as follows:</p>
<ul>
<li>Rent: $1,300</li>
<li>Utilities: $200</li>
<li>Gas: $200</li>
<li>Health Insurance: $100</li>
<li>Dining Out: $200</li>
<li>Groceries: $250</li>
</ul>
<p>You’re left with $1,950 each month. This example is simple and doesn’t factor in taxes or other expenses such as savings, car maintenance, pet costs, entertainment, and more.</p>
<p>If you’re debating a $30,000 student loan at a 9% interest rate and a 15-year repayment term, you’d be looking at a $304 minimum monthly payment. Now remember, this is for <em>one </em>loan. If you took out four of these loans, one for each year you’re in school, you’re looking at an even heftier monthly payment.</p>
<p>So, before taking out a student loan, consider whether the estimated monthly payments would be affordable for you given your future income potential. Being realistic about what you may be able to afford could prevent you from missing a payment down the line.</p>
<p><strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">What credit score is needed for a student loan?</a></p>


<h3 class="wp-block-heading"><strong>Keep Open Lines of Credit You Already Have</strong></h3>
<p>The length of your credit history is another important factor in determining your credit score. The longer you have had open lines of credit, the better your credit score will typically be. Having, and properly managing, your credit for a long time shows lenders that you’re responsible.</p>
<p>While it may sound counterintuitive, closing any open lines of credit you currently have could hurt your credit score because it shortens the length of your credit history. Unless you absolutely need to, stay away from closing any current accounts.</p>


<h3 class="wp-block-heading"><strong>Don’t Open New Lines of Credit</strong></h3>
<p>Opening new lines of credit will cause what’s called a hard inquiry. A hard inquiry occurs when a financial institution checks your credit report before making a lending decision. When lenders do a hard inquiry, they’re attempting to assess how you’ve handled your credit in the past.</p>
<p>Just like you’d only lend money to someone you trust, lenders want to make sure you’re a sound investment for them before dishing out the cash. A <a href="https://www.sparrowfi.com/blog/whats-a-soft-credit-inquiry-whats-a-hard-credit-inquiry">hard inquiry</a>, though, can temporarily hurt your credit. So, if you’re looking to take out a student loan anytime soon, we recommend holding off on opening any new lines of credit.</p>


<h3 class="wp-block-heading"><strong>Check Your Credit Report</strong></h3>
<p>If you have bad credit but aren’t totally sure why, you may want to check your credit report. Your credit report is important to look over for many reasons, but especially to check for errors, fraud, or identity theft. Even a small error on your credit report can significantly hurt your credit score, so we recommend checking fairly often.</p>
<p>There are many financial institutions, such as banks and credit card companies, that offer free credit reports. If yours don’t, utilize the free <a href="https://www.annualcreditreport.com/index.action">Annual Credit Report</a> website. You are, by law, entitled to these reports yearly.</p>


<h2 class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
<p>So, yes. You can get a student loan with bad credit. However, it might make the process a bit more challenging. Start thinking ahead about where your credit is at, and if it’s not ideal, start taking small steps to build it. To <a href="https://www.sparrowfi.com/">find a private student loan</a> for students with bad/no credit, complete the <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a> today.</p>
<p> </p>
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<p> </p>
<p><em>Sparrow&#8217;s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.</em></p>

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<p class="has-text-align-left"><em>"Can I get a student loan even though I have bad credit?"</em></p>
The simple answer: yes. The more complicated answer: welllll, yes, but it’s going to be trickier.

While most federal student loans don’t require you to have a good credit score, or any credit at all, most <a href="https://www.sparrowfi.com/">private student loans</a>, on the other hand, do. If you’re worried about your poor credit score preventing you from being able to pay for college, don’t fret. While it may be more difficult, it isn’t entirely impossible.

Here’s what you can do to get a student loan with bad credit.

&gt;&gt; <strong>MORE:</strong> <a href="https://www.sparrowfi.com/undergrad-student-loan">Compare student loan rates from 17+ lenders</a>

<h3><strong><a href="https://www.collegeavestudentloans.com/application/?SC=CAIS01&amp;ACT=US&amp;utm_campaign=affiliate%20ongoing&amp;utm_source=sparrow&amp;utm_medium=aggregator&amp;utm_content=apply&amp;brand=college%20ave&amp;product=inschool&amp;p_aff=sparrow&amp;goal=acquisition&amp;agg_ref_id=affiliate-000-000">College Ave Student Loans</a></strong></h3>
College Ave Student Loans offers educational funding for undergraduate, graduate, professional, and career school students, and parents of students. To qualify for a student loan with College Ave, you will need a credit score in the mid-600s. College Ave is a great option if you are seeking a more flexible repayment term that allows you to find a loan that matches your budget.

<h3><strong><a href="https://www.earnest.com/student-loans?utm_source=sparrow&amp;utm_medium=referral&amp;utm_content=affiliate-000-000&amp;redirect_event=true&amp;b=sparrowslo1365">Earnest</a></strong></h3>
<a href="https://www.earnest.com/student-loans?utm_source=sparrow&amp;utm_medium=referral&amp;utm_content=affiliate-000-000&amp;redirect_event=true&amp;b=sparrowslo1365">Earnest’s student loans</a> provide funding to undergraduate, graduate, and professional students. Earnest has a minimum credit score requirement of 650. They’re a great option if you are seeking competitive interest rates, unique borrower perks, and flexible repayment options that allow you to find a loan that matches your budget.

<h3><strong><a href="https://student.edly.co/?utm_source=sparrow&amp;utm_campaign=affiliate-000-000">Edly</a></strong></h3>
<a href="https://student.edly.co/?utm_source=sparrow&amp;utm_campaign=affiliate-000-000">Edly Income-Based Repayment (IBR) Student Loans</a>, originated by Edly’s partner FinWise Bank, provide an alternative loan option for students. Students who are approved for an Edly student loan will not have to make payments while in school. Instead, borrowers make payments after graduation based on their income. Due to the structure of IBR loans, borrowers have a variety of benefits when it comes to repayment. An Edly IBR loan is best if you are seeking a loan option with no cosigner, competitive repayment terms, and flexible repayment options.

<h3><strong><a href="https://www.funding-u.com/no-cosigner-student-loans">Funding U</a></strong></h3>
<a href="https://www.funding-u.com/no-cosigner-student-loans">Funding U</a> is an online lender that focuses exclusively on undergraduate students with no cosigner. Rather than looking at your credit score or income, Funding U looks at non-traditional metrics such as your school, major, GPA and estimated future earnings to assess your creditworthiness. Funding U’s student loan is best if you are a high-achieving undergraduate student with limited credit history and no access to a creditworthy cosigner.

<h3><strong><a href="https://www.lendkey.com/partner-psl/?clickid=VQgziE01AxyPWbPUtF1bfymMUkFxkz01uyj13s0&amp;irgwc=1&amp;sk=AFF-Sparrow">LendKey</a></strong></h3>
<a href="abouthttps://www.lendkey.com/partner-psl/?clickid=VQgziE01AxyPWbPUtF1bfymMUkFxkz01uyj13s0&amp;irgwc=1&amp;sk=AFF-Sparrow">LendKey</a> is an institution that offers educational funding to undergraduate and graduate students. By connecting borrowers with a network of 100+ lesser-known credit unions and community banks, LendKey allows you to work with smaller lenders with low rates and good customer service, rather than traditional lending institutions. LendKey has a minimum credit requirement of 660. It’s best for students who want generous cosigner release and forbearance policies.

<h3><strong><a href="https://mpowerfinancing.com/get-a-loan?utm_source=sparrowfi&amp;utm_medium=link&amp;utm_term=website&amp;utm_content=lender-box&amp;sub_id=affiliate-000-000">MPOWER</a></strong></h3>
<a href="https://mpowerfinancing.com/get-a-loan?utm_source=sparrowfi&amp;utm_medium=link&amp;utm_term=website&amp;utm_content=lender-box&amp;sub_id=affiliate-000-000">MPOWER</a> is an online lender that offers educational funding to international, domestic, and DACA students. They offer non-cosigned undergraduate and graduate student loans. It is best for international students and DACA students who don’t have a credit history and can’t access a qualified cosigner.

<h2 id="federal-loans" class="wp-block-heading"><strong>Can You Get Federal Student Loans with Bad Credit?</strong></h2>
Most <a href="https://wordpress.sparrowfi.com/category/federal-student-loans/">federal student loans</a> don’t require you to have a good credit score (or any credit at all). They also tend to have lower interest rates and better terms and conditions. These qualities make them a great place to start when thinking about financing your college education.

There are four main types of federal student loans, three of which do not require a credit check or a high credit score to qualify.

<h3 class="wp-block-heading"><strong>Federal Loans that Don’t Require a Credit Check</strong></h3>
<h4 class="wp-block-heading"><strong>Direct Subsidized Loans</strong></h4>
Direct Subsidized Loans are available only to undergraduate students who demonstrate financial need. This means that you may not qualify for Direct Subsidized Loans.

If you do, the government will pay the interest on your <a href="https://www.sparrowfi.com/blog/the-difference-between-subsidized-and-unsubsidized-loans">Direct Subsidized Loans</a> while you are in school. Once you graduate, you’ll be in charge of paying them back, interest included.
<h4 class="wp-block-heading"><strong>Direct Unsubsidized Loans</strong></h4>
Direct Unsubsidized Loans are available to both undergraduate and graduate students, and you do not need to prove financial need to qualify. However, while in school, the government does <em>not </em>pay interest on these loans. So, while you’re hitting the books, interest will be accumulating in the meantime.
<h4 class="wp-block-heading"><strong>Direct Consolidation Loans</strong></h4>
Direct Consolidation Loans allow you to combine more than one federal loan into one. So, if you have several federal loans and want to simplify your payments, you can combine them into one singular loan, and thus, one singular payment. When you <a href="https://www.sparrowfi.com/blog/how-to-consolidate-student-loans-with-bad-credit">consolidate</a>, your new interest rate is the average of your previous loans’ interest rates.

<h3 class="wp-block-heading"><strong>Federal Loans That Do Require a Credit Check</strong></h3>
<h4 class="wp-block-heading"><strong>Direct PLUS Loans</strong></h4>
Direct PLUS Loans are available to graduate/professional students and parents of students. Like Unsubsidized Loans, you will be responsible for any interest that accrues, even while in school. However, unlike all other federal loan types, <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">Direct PLUS Loans</a> <em>do </em>require an adverse credit check.

While the credit check process could be a bummer if you have bad credit, there is hope if you don’t pass it. Adding a creditworthy endorser to the loan may allow you to qualify.

<h3 class="wp-block-heading"><strong>How to Get Federal Loans with Bad Credit</strong></h3>
In order to get federal aid, you need to fill out the Free Application for Federal Student Aid (<a href="https://www.sparrowfi.com/blog/6-simple-steps-to-fill-out-fafsa">FAFSA</a>). This form will ask you to provide information regarding you and your family’s financial situation to determine your eligibility for aid, but it will not run a credit check as part of that evaluation.

<strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/most-common-fafsa-errors-to-avoid-when-applying">Most common FAFSA application errors to avoid</a>

It’s important to note that you don’t have to accept all the federal aid that you qualify for. You should always consider the terms and conditions and think about what makes most sense for you and your educational journey.

While federal loans <em>do </em>tend to be a better choice in comparison to private student loans, they won’t <em>always </em>be best. There’s a variety of different <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">financial aid options for students</a>, so make sure you understand what they all are and what they all mean before agreeing to one.

<strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">What are 4 types of financial aid for college?</a>

<h2 id="private-loans" class="wp-block-heading"><strong>Refinancing Student Loans with Bad Credit</strong></h2>
The goal of student loan refinancing is typically to score a lower interest rate or monthly payment, saving you money in the long run. If you have a bad credit score, it may be challenging to secure a lower rate than what you currently have.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/student-loan-refi">Compare student loan refinance rates from 17+ lenders</a>

Before refinancing, ask yourself the following questions:
<ol>
 	<li>Has your credit score improved since you took out the loan you currently have?</li>
 	<li>Are you paying a high interest rate on your current loan? Do you believe you could secure a lower interest rate based on the market?</li>
</ol>
If you answered yes to either of these questions, then refinancing may be a good option for you.

&gt;&gt; <strong>MORE: </strong><a href="https://www.sparrowfi.com/blog/should-i-refinance-my-student-loans">Should I refinance my student loans</a>

<h2 class="wp-block-heading"><strong>Best Refinance Loans for Bad Credit</strong></h2>
Here is a list of the top refinance loan companies for bad credit. In just three minutes, you can compare real and personalized student loan refinancing rates from 17+ lenders - for free - by using the <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>.

<h2 class="wp-block-heading"><strong>What is Considered Bad Credit?</strong></h2>
Generally speaking, you will need a credit score of at least 670 or higher to qualify with most private lenders. That said, what each individual lender considers “bad” credit will vary. And, there are several lenders that work with borrowers with lower credit scores.

It's important to note that most private lenders use the FICO credit scoring model. The FICO scale uses a range of 300-850 to measure creditworthiness, so the closer you are to 850 the better.

<strong>&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">What credit score is needed for a student loan?</a>

<img class="" src="https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1024x576.png" alt="This image has an empty alt attribute; its file name is Blog-Imagery-1024x576.png" width="768" height="432" />

<h3><strong><a href="https://asla.accountcenter.studentloan.org/refinance/default/welcome?ref=arspar&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=spar-refi&amp;qfid=affiliate-000-000">Arkansas Student Loan Authority</a></strong></h3>
<a href="https://asla.accountcenter.studentloan.org/refinance/default/welcome?ref=arspar&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=spar-refi&amp;qfid=affiliate-000-000">The Arkansas Student Loan Authority (ASLA)</a> is an Arkansas state entity that provides student loan refinancing for Arkansas residents. ASLA has a minimum credit score requirement of 670.

<h3><strong><a href="https://www.collegeavestudentloans.com/application/?SC=CARF01&amp;ACT=US&amp;utm_campaign=affiliate%20ongoing&amp;utm_source=sparrow&amp;utm_medium=aggregator&amp;utm_content=apply&amp;brand=college%20ave&amp;product=refi&amp;p_aff=sparrow&amp;goal=acquisition&amp;agg_ref_id=affiliate-000-000">College Ave Student Loans</a></strong></h3>
<a href="https://www.collegeavestudentloans.com/application/?SC=CARF01&amp;ACT=US&amp;utm_campaign=affiliate%20ongoing&amp;utm_source=sparrow&amp;utm_medium=aggregator&amp;utm_content=apply&amp;brand=college%20ave&amp;product=refi&amp;p_aff=sparrow&amp;goal=acquisition&amp;agg_ref_id=affiliate-000-000">College Ave</a> offers student loan refinancing with competitive rates, flexible repayment terms, and strong customer service. Their student loan refinance offering is best if you are seeking a more flexible repayment term that allows you to find a loan that matches your budget. To qualify for a refinance loan with College Ave, you will need a credit score in the mid-600s.

<h3><strong><a href="https://www.iowastudentloan.org/refinance-loan/student-loan.aspx?ref=SPAR&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=reset&amp;campaign=sparrow">ISL Education Lending</a></strong></h3>
<a href="https://www.iowastudentloan.org/refinance-loan/student-loan.aspx?ref=SPAR&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=reset&amp;campaign=sparrow">ISL</a> is a nonprofit lender that offers both private student loans and student loan refinancing. ISL’s student loan refinancing is best if you haven’t graduated and want generous forbearance policies. ISL has a minimum credit score of 670.

<h3 class="wp-block-heading"><strong>Can You Get a Student Loan with Bad Credit</strong>?</h3>
Yes. Regardless of which student loan type you choose, whether federal or private, there are options for borrowers with bad credit.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/how-to-remove-student-loans-from-your-credit-report">How to remove student loans from your credit report</a>

<h3><strong><a href="https://www.sofi.com/signup/landing-register/isl?clickId=2dNXuI0-ixyPTzwWKR1aoR6KUkF2Wg1E6ykZRU0&amp;irgwc=1&amp;adId=846867&amp;adName=SoFi%20Private%20Student%20Loan&amp;partnerId=2776865&amp;partnerName=Sparrow&amp;adTarget=inschool&amp;partnerType=Affiliate&amp;adDepartment=BD&amp;sharedId=&amp;ami=&amp;programId=11190&amp;experiment=isl-merge-page-v5&amp;variant=control&amp;utm_source=impact&amp;utm_medium=affiliates&amp;utm_campaign=SoFi%20Private%20Student%20Loan">SoFi</a></strong></h3>
<a href="https://www.sofi.com/signup/landing-register/isl?clickId=2dNXuI0-ixyPTzwWKR1aoR6KUkF2Wg1E6ykZRU0&amp;irgwc=1&amp;adId=846867&amp;adName=SoFi%20Private%20Student%20Loan&amp;partnerId=2776865&amp;partnerName=Sparrow&amp;adTarget=inschool&amp;partnerType=Affiliate&amp;adDepartment=BD&amp;sharedId=&amp;ami=&amp;programId=11190&amp;experiment=isl-merge-page-v5&amp;variant=control&amp;utm_source=impact&amp;utm_medium=affiliates&amp;utm_campaign=SoFi%20Private%20Student%20Loan">SoFi</a> is one of the largest student loan refinance companies in the industry. With competitive interest rates, a diverse set of repayment options, and exclusive member benefits, SoFi is a good fit for borrowers with an associate’s degree or higher or borrowers with a high income. SoFi has a minimum credit score of 650.

<h2 id="what-to-do-if-denied" class="wp-block-heading"><strong>What to Do if You Were Denied a Student Loan Due to Bad Credit</strong></h2>
If you were initially denied a private student loan due to poor credit, your best bet is to look for a <a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">creditworthy cosigner</a>. A cosigner is someone who agrees to sign onto the loan. In doing so, they agree that if the borrower fails to repay the loan, the cosigner will take responsibility for paying it back.

&gt;&gt; <strong>MORE: </strong><a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">What is a private student loan cosigner?</a>

Having a cosigner is valuable because their credit score will be factored into the lender’s decision to work with you, which can also help you secure a better interest rate and terms. So, if your credit score isn’t up to par but theirs is, you may be in luck.

Make sure you don’t pick just anyone to cosign unless you really, <em>really</em> have to. Make sure to find someone that is creditworthy and has a history of managing their finances effectively. Additionally, always make sure to have open conversations with whoever you choose before they agree to cosign. Explain the pros and cons of being a cosigner and what impact it could have for them. Discussing expectations around repaying the loan is also important so your cosigner knows what to expect.

<strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/can-you-get-an-international-student-loan-without-a-cosigner">Can you get an international student loan without a cosigner?</a>

If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking <b>Apply</b> below.

<h2 id="credit-tips" class="wp-block-heading"><strong>Tips for Improving Your Credit</strong></h2>
Improving your credit score won’t happen overnight, but it is worthwhile to take any steps you can throughout the loan process to boost your credit.

Here’s a few tips to help get your credit score in check.

<h3 class="wp-block-heading"><strong>Stay Aware of How Much Debt You’re Taking On</strong></h3>
Your credit score is calculated based on a variety of factors, one being your payment history. In fact, your payment history is the most important part of your credit score, making up 35% of the calculation.


<figure class="wp-block-image size-large is-resized"><img class="wp-image-2224" src="https://wordpress.sparrowfi.com/wp-content/uploads/2022/08/Blog-Imagery-1-1024x576.png" alt="" width="768" height="432" /></figure>


When you take on debt, such as student loans, you are doing so with the understanding that that money will be paid back and paid on time. If you make consistent, on-time payments, it’s good for your credit, as it demonstrates an ability to pay back debts successfully. If you pay late or miss payments, it could hurt your credit, as it demonstrates an inability to pay back debts successfully.

&gt;&gt; <strong>MORE</strong>: <a href="https://www.sparrowfi.com/blog/the-most-effective-debt-payoff-strategy-you-need-to-know">Most effective debt-payoff strategy</a>

While this may sound like a no-brainer, you’ll want to be aware of how much debt you’re taking on. If you take on too much, it could make you more likely to miss a payment or go into loan default.

Remember to be realistic about how much you will be able to afford in monthly payments. Utilizing a <a href="https://smartasset.com/student-loans/student-loan-calculator#quE69fe79Y">student loan calculator</a> to estimate your monthly loan payments after graduation is a great way to get real about whether the loan will be feasible when repayment starts. Let’s use an example here.

Let’s say you’re studying to be a public school teacher, and you land a job making $50,000 a year after graduation. This would land you around $4,200 per month (if we round up) to budget with. <em>(For the ease of this example, we aren’t factoring in taxes.)</em>

Now, let’s say your monthly expenses are as follows:
<ul>
 	<li>Rent: $1,300</li>
 	<li>Utilities: $200</li>
 	<li>Gas: $200</li>
 	<li>Health Insurance: $100</li>
 	<li>Dining Out: $200</li>
 	<li>Groceries: $250</li>
</ul>
You’re left with $1,950 each month. This example is simple and doesn’t factor in taxes or other expenses such as savings, car maintenance, pet costs, entertainment, and more.

If you’re debating a $30,000 student loan at a 9% interest rate and a 15-year repayment term, you’d be looking at a $304 minimum monthly payment. Now remember, this is for <em>one </em>loan. If you took out four of these loans, one for each year you’re in school, you’re looking at an even heftier monthly payment.

So, before taking out a student loan, consider whether the estimated monthly payments would be affordable for you given your future income potential. Being realistic about what you may be able to afford could prevent you from missing a payment down the line.

<strong>&gt;&gt; MORE: </strong><a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">What credit score is needed for a student loan?</a>

<h3 class="wp-block-heading"><strong>Keep Open Lines of Credit You Already Have</strong></h3>
The length of your credit history is another important factor in determining your credit score. The longer you have had open lines of credit, the better your credit score will typically be. Having, and properly managing, your credit for a long time shows lenders that you’re responsible.

While it may sound counterintuitive, closing any open lines of credit you currently have could hurt your credit score because it shortens the length of your credit history. Unless you absolutely need to, stay away from closing any current accounts.

<h3 class="wp-block-heading"><strong>Don’t Open New Lines of Credit</strong></h3>
Opening new lines of credit will cause what’s called a hard inquiry. A hard inquiry occurs when a financial institution checks your credit report before making a lending decision. When lenders do a hard inquiry, they’re attempting to assess how you’ve handled your credit in the past.

Just like you’d only lend money to someone you trust, lenders want to make sure you’re a sound investment for them before dishing out the cash. A <a href="https://www.sparrowfi.com/blog/whats-a-soft-credit-inquiry-whats-a-hard-credit-inquiry">hard inquiry</a>, though, can temporarily hurt your credit. So, if you’re looking to take out a student loan anytime soon, we recommend holding off on opening any new lines of credit.

<h3 class="wp-block-heading"><strong>Check Your Credit Report</strong></h3>
If you have bad credit but aren’t totally sure why, you may want to check your credit report. Your credit report is important to look over for many reasons, but especially to check for errors, fraud, or identity theft. Even a small error on your credit report can significantly hurt your credit score, so we recommend checking fairly often.

There are many financial institutions, such as banks and credit card companies, that offer free credit reports. If yours don’t, utilize the free <a href="https://www.annualcreditreport.com/index.action">Annual Credit Report</a> website. You are, by law, entitled to these reports yearly.

<h2 id="h-best-private-student-loans-for-bad-credit" class="wp-block-heading"><strong>Best Private Student Loans for Bad Credit</strong></h2>
First, here's is a list of the top 5 student loans for bad credit. Rather than searching for lenders one-by-one, we recommend starting the process with an automated <a href="https://www.sparrowfi.com/">student loan search tool</a>. After you complete the free <a href="https://www.sparrowfi.com/sign-up">Sparrow form</a>, we’ll show you the rates and terms you’d qualify for with 17+ premier lenders.

<h2 class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
So, yes. You can get a student loan with bad credit. However, it might make the process a bit more challenging. Start thinking ahead about where your credit is at, and if it’s not ideal, start taking small steps to build it. To <a href="https://www.sparrowfi.com/">find a private student loan</a> for students with bad/no credit, complete the <a href="https://www.app.sparrowfi.com/login/type">Sparrow form</a> today.

 
<div class="wp-block-spacer" aria-hidden="true"></div>
 

<em>Sparrow's goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.</em>

<h3><strong><a href="https://asla.accountcenter.studentloan.org/inschool/welcome?ref=arspar&amp;utm_source=sparrow&amp;utm_medium=referral&amp;utm_campaign=spar-is&amp;qfid=affiliate-000-000">Arkansas Student Loan Authority</a></strong></h3>
The Arkansas Student Loan Authority (ASLA) is an Arkansas state entity that provides educational funding for all Arkansas students who wish to attend higher education institutions. ASLA has a minimum credit score requirement of 670. ASLA is a great option for Arkansas students.

<h3><strong><a href="https://www.ascentfunding.com/college-loans/sparrow/?utm_source=partner&amp;utm_medium=sparrowfi_rev_learn_subid--affiliate-000-000">Ascent</a> </strong></h3>
<a href="https://www.ascentfunding.com/college-loans/sparrow/?utm_source=partner&amp;utm_medium=sparrowfi_rev_learn_subid--affiliate-000-000">Ascent</a> is an online lender that offers educational funding for students. They offer three types of student loans: a traditional cosigned loan, a non-cosigned credit-based loan, and a non-cosigned outcomes-based loan. Collectively, the three options provide a great selection for those who do not have a cosigner available, are international or DACA students, or have lower credit scores. Ascent’s minimum credit requirement varies based on the loan.

<h3><strong><a href="https://studentloans.com/?mc=0000009i">Brazos</a></strong></h3>
Brazos is a non-profit lender offering educational funding through private student loans available only to Texas Residents. They offer a wide range of loan options, covering undergraduate, graduate, MBA, law, medical, dental, veterinary, and doctoral degree programs. Brazos does not disclose their minimum credit requirement. Brazos is a great option if you live in Texas and want competitive interest rates.

Federal student loans don’t require you to have a good credit score, or any credit at all. Private student loans, on the other hand, do.

How and Where to Get Private Student Loans for Bad Credit

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Almost 30 states in the United States offer free community college programs based on income, merit, geography, etc. Here are those states:

Is Community College Free? Yes If You Live in These States

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Abigail Eun

<p>If you’re a borrower, you may be wondering, “Are student loan payments tax deductible?”</p>
<p>For qualifying borrowers, the answer is yes. <strong>Student loan payments ARE tax deductible.</strong> The <em>student loan interest deduction</em> is a federal tax break that lowers how much of your income is taxed. The federal government created this deduction to assist borrowers in paying for higher education.</p>
<p>To find out if you&#8217;re eligible for this tax deduction, keep reading.</p>


<h2 id="h-what-is-the-student-loan-interest-deduction" class="wp-block-heading"><strong>What Is The Student Loan Interest Deduction?</strong></h2>
<p>The student loan interest deduction is a federal income tax deduction that allows qualifying borrowers to deduct up to $2,500 from their taxable income.</p>
<p>Your eligibility for this deduction depends on your <em>filing status</em> and <em>income level</em>.</p>


<h2 id="h-how-does-the-student-loan-tax-deduction-work" class="wp-block-heading"><strong>How Does the Student Loan Tax Deduction Work?</strong></h2>
<p>The student loan tax deduction enables you to subtract up to $2,500 from your taxable income for the <em>interest</em> paid on your student loans. Accordingly, this deduction helps you pay less in federal taxes. The <a href="https://www.irs.gov/taxtopics/tc456">Internal Revenue Service (IRS)</a>, the federal tax collection agency, offers various tax deductions, including student loan interest deduction.</p>
<p>To receive the deduction, you need to claim an “adjustment to income” on a <a href="https://www.irs.gov/pub/irs-pdf/f1040.pdf">1040 form</a>. Fortunately, you do <em>not</em> have to fill out a Schedule A, which is used for itemized deductions. To make this process as quick and easy as possible, gather the following information:</p>
<ul>
<li>Filing status</li>
<li>Basic income information</li>
<li>Your adjusted gross income</li>
<li>Educational expenses paid with nontaxable funds</li>
</ul>
<p>If you paid more than $600 in interest on your student loan debt, your lender/loan provider will give you a 1098-E.</p>
<p><strong>Note:</strong> The deduction applies only to non-federal loans that gathered interest, as the Biden administration placed federal student loans in forbearance in 2021. <em>Learn more about <a href="https://www.sparrowfi.com/blog/when-will-i-receive-bidens-student-loan-forgiveness" target="_blank" rel="noreferrer noopener">Biden&#8217;s student loan forgiveness</a></em>.</p>


<h2 id="h-who-qualifies-for-the-student-loan-tax-deduction" class="wp-block-heading"><strong>Who Qualifies for the Student Loan Tax Deduction?</strong></h2>
<p>To qualify for the student loan tax deduction, you must meet the following eligibility requirements in income, filing status, loan timeline, and loan type.</p>
<h3>Income</h3>
<p>Your modified adjusted gross income (MAGI) is your income after subtracting applicable tax penalties and tax deductions. While you can calculate your MAGI manually, online <a href="https://www.omnicalculator.com/finance/magi">calculators</a> can simplify the process.</p>
<ul>
<li>If you are a <strong>single</strong> filer, your MAGI must be less than $85,000 to qualify for the student loan tax deduction.</li>
<li>If you are a <strong>joint</strong> filer, your MAGI must be less than $170,000 to qualify.</li>
</ul>


<h3><strong>Filing Status</strong></h3>
<p>To claim the student loan tax deduction, the eligible loan must have been borrowed for one of the following:</p>
<ul>
<li>Yourself</li>
<li>Your partner</li>
<li>Your dependent</li>
</ul>
<p>However, you cannot claim this deduction if:</p>
<ul>
<li>You are <a href="https://www.sparrowfi.com/blog/what-married-couples-need-to-know-about-student-loan-forgiveness" target="_blank" rel="noreferrer noopener">married but filing separately</a>. To qualify for the deduction, you must file jointly.</li>
<li>You are claimed as a dependent on someone else&#8217;s tax return.</li>
<li>You borrowed the student loan in your name but your parents are making the loan payments.</li>
<li>You are a parent paying for the loan taken out in your child’s name, as you are not the legal owner of the loan.</li>
</ul>


<h3><strong>Loan Timeline </strong></h3>
<p>The student loan must have been taken out during an academic period when you were enrolled for at least half the time at a qualifying post-secondary institution.</p>
<p>Additionally, it must have been used during a reasonable period after it was taken out, with loan amounts used within 90 days of the academic period.</p>


<h3><strong>Loan Type</strong></h3>
<p>Both <a href="https://help.sparrowfi.com/en/articles/6136540-what-is-the-difference-between-federal-student-loans-and-private-student-loans" target="_blank" rel="noreferrer noopener">federal and private student loans</a> qualify for this deduction. However, you must have paid interest for the loan in 2019, as the student loan interest deduction was introduced in the 2020 Coronavirus Tax Relief.</p>
<p><strong>Note:</strong> You can claim prepaid loan interest and origination fees for the student loan tax deduction.</p>


Get started

<h2 id="h-is-it-worth-claiming-student-loan-interest-on-taxes" class="wp-block-heading"><strong>Is It Worth Claiming Student Loan Interest on Taxes?</strong></h2>
<p>Regardless of your income class, <strong>you should claim your student loan interest on taxes if you qualify</strong>. Claiming this deduction will not result in any loss, as it lowers your taxable income.</p>


<h3 class="wp-block-heading"><strong>How Much Can You Save with the Student Loan Interest Deduction?</strong></h3>
<p>The amount of money you can save depends on your income. The following table shows the average deduction values you can expect, based on your income class.</p>


<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts From the Nest</strong></h2>
<p>If you qualify for the student loan interest deduction, be sure to claim the adjustment on your 1040 tax form. Doing so will reduce your taxable income. Accordingly, it will reduce the amount of taxes you owe.</p>


If you’re a borrower, you may be wondering, “Are student loan payments tax deductible?”

For qualifying borrowers, the answer is yes. <strong>Student loan payments ARE tax deductible.</strong> The <em>student loan interest deduction</em> is a federal tax break that lowers how much of your income is taxed. The federal government created this deduction to assist borrowers in paying for higher education.

To find out if you're eligible for this tax deduction, keep reading.

<h3 class="wp-block-heading"><strong>How Much Can You Save with the Student Loan Interest Deduction?</strong></h3>
The amount of money you can save depends on your income. The following table shows the average deduction values you can expect, based on your income class.

<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts From the Nest</strong></h2>
If you qualify for the student loan interest deduction, be sure to claim the adjustment on your 1040 tax form. Doing so will reduce your taxable income. Accordingly, it will reduce the amount of taxes you owe.

<h2 id="h-what-is-the-student-loan-interest-deduction" class="wp-block-heading"><strong>What Is The Student Loan Interest Deduction?</strong></h2>
The student loan interest deduction is a federal income tax deduction that allows qualifying borrowers to deduct up to $2,500 from their taxable income.

Your eligibility for this deduction depends on your <em>filing status</em> and <em>income level</em>.

<h2 id="h-how-does-the-student-loan-tax-deduction-work" class="wp-block-heading"><strong>How Does the Student Loan Tax Deduction Work?</strong></h2>
The student loan tax deduction enables you to subtract up to $2,500 from your taxable income for the <em>interest</em> paid on your student loans. Accordingly, this deduction helps you pay less in federal taxes. The <a href="https://www.irs.gov/taxtopics/tc456">Internal Revenue Service (IRS)</a>, the federal tax collection agency, offers various tax deductions, including student loan interest deduction.

To receive the deduction, you need to claim an “adjustment to income” on a <a href="https://www.irs.gov/pub/irs-pdf/f1040.pdf">1040 form</a>. Fortunately, you do <em>not</em> have to fill out a Schedule A, which is used for itemized deductions. To make this process as quick and easy as possible, gather the following information:
<ul>
 	<li>Filing status</li>
 	<li>Basic income information</li>
 	<li>Your adjusted gross income</li>
 	<li>Educational expenses paid with nontaxable funds</li>
</ul>
If you paid more than $600 in interest on your student loan debt, your lender/loan provider will give you a 1098-E.

<strong>Note:</strong> The deduction applies only to non-federal loans that gathered interest, as the Biden administration placed federal student loans in forbearance in 2021. <em>Learn more about <a href="https://www.sparrowfi.com/blog/when-will-i-receive-bidens-student-loan-forgiveness" target="_blank" rel="noreferrer noopener">Biden's student loan forgiveness</a></em>.

<h2 id="h-who-qualifies-for-the-student-loan-tax-deduction" class="wp-block-heading"><strong>Who Qualifies for the Student Loan Tax Deduction?</strong></h2>
To qualify for the student loan tax deduction, you must meet the following eligibility requirements in income, filing status, loan timeline, and loan type.
<h3>Income</h3>
Your modified adjusted gross income (MAGI) is your income after subtracting applicable tax penalties and tax deductions. While you can calculate your MAGI manually, online <a href="https://www.omnicalculator.com/finance/magi">calculators</a> can simplify the process.
<ul>
 	<li>If you are a <strong>single</strong> filer, your MAGI must be less than $85,000 to qualify for the student loan tax deduction.</li>
 	<li>If you are a <strong>joint</strong> filer, your MAGI must be less than $170,000 to qualify.</li>
</ul>

<h3><strong>Filing Status</strong></h3>
To claim the student loan tax deduction, the eligible loan must have been borrowed for one of the following:
<ul>
 	<li>Yourself</li>
 	<li>Your partner</li>
 	<li>Your dependent</li>
</ul>
However, you cannot claim this deduction if:
<ul>
 	<li>You are <a href="https://www.sparrowfi.com/blog/what-married-couples-need-to-know-about-student-loan-forgiveness" target="_blank" rel="noreferrer noopener">married but filing separately</a>. To qualify for the deduction, you must file jointly.</li>
 	<li>You are claimed as a dependent on someone else's tax return.</li>
 	<li>You borrowed the student loan in your name but your parents are making the loan payments.</li>
 	<li>You are a parent paying for the loan taken out in your child’s name, as you are not the legal owner of the loan.</li>
</ul>

<h3><strong>Loan Timeline </strong></h3>
The student loan must have been taken out during an academic period when you were enrolled for at least half the time at a qualifying post-secondary institution.

Additionally, it must have been used during a reasonable period after it was taken out, with loan amounts used within 90 days of the academic period.

<h3><strong>Loan Type</strong></h3>
Both <a href="https://help.sparrowfi.com/en/articles/6136540-what-is-the-difference-between-federal-student-loans-and-private-student-loans" target="_blank" rel="noreferrer noopener">federal and private student loans</a> qualify for this deduction. However, you must have paid interest for the loan in 2019, as the student loan interest deduction was introduced in the 2020 Coronavirus Tax Relief.

<strong>Note:</strong> You can claim prepaid loan interest and origination fees for the student loan tax deduction.

<h2 id="h-is-it-worth-claiming-student-loan-interest-on-taxes" class="wp-block-heading"><strong>Is It Worth Claiming Student Loan Interest on Taxes?</strong></h2>
Regardless of your income class, <strong>you should claim your student loan interest on taxes if you qualify</strong>. Claiming this deduction will not result in any loss, as it lowers your taxable income.

If you’re a borrower, you may be wondering, “Are student loan payments tax deductible?” For qualifying borrowers, the answer is yes. Student loan payments ARE tax deductible. The student loan interest deduction is a federal tax break that lowers how much of your income is taxed. The federal government created this deduction to assist borrowers &hellip; Continue reading "Are Student Loan Payments Tax Deductible?"

Are Student Loan Payments Tax Deductible?

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From effective time management to smart study strategies, discover six key tips for students to succeed this school year.

6 Tips for Students to be Successful this School Year

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Sparrow Team

<p>Building a college list, or a list of colleges and universities you’d be interested in applying to, is an important step when applying to college.</p>
<p>It can help you identify your best-fit colleges, narrow down your options, and make informed decisions about where to apply and ultimately attend.</p>
<p>If you don’t know how to build a college list, follow these steps.</p>


<h2 id="start-early" class="wp-block-heading"><strong>Start Early</strong></h2>
<p>Rome wasn’t built in a day, and your college list shouldn’t be either.</p>
<p>If you have the opportunity to do so, start building your college list during your junior year of high school. That way, you’ll have plenty of time to research colleges, gather information, and make informed decisions.</p>
<p>Starting early can also help you reflect on your priorities and goals, without the pressure and stress of impending deadlines.</p>


<h2 id="create-a-list-of-must-haves" class="wp-block-heading"><strong>Create a List of Must-Haves</strong></h2>
<p>Whether it’s a fierce school spirit, an emphasis on STEM fields, or rich research opportunities, brainstorm a list of qualities you want your future college to have. This will help you narrow down your college list by allowing you to see how the schools you’ve selected differ.</p>
<p>Here are some factors you can consider:</p>
<h4 class="wp-block-heading"><strong>Inside the Classroom</strong></h4>
<ul>
<li>How big is the average classroom?</li>
<li>Do you prefer large or small classroom sizes?</li>
<li>What kind of academic resources does the college have?</li>
<li>What major/field of study is the college known for?</li>
<li>What are the top programs at the college?</li>
</ul>
<h4 class="wp-block-heading"><strong>Outside the Classroom</strong></h4>
<ul>
<li>How many clubs (that you would be interested in) are there on campus?</li>
<li>What do students do for fun?</li>
<li>Is the campus walkable? Do you need a bike?</li>
<li>Do students generally live on campus or off campus?</li>
<li>Does the college provide housing for all four years?</li>
<li>Is Greek life prominent on campus?</li>
<li>What does the social scene look like?</li>
</ul>
<h4 class="wp-block-heading"><strong>Beyond the Campus</strong></h4>
<ul>
<li>Is the campus in a small town or a big city? Which do you prefer?</li>
<li>What does the weather look like?</li>
<li>Is the nearest city accessible?</li>
<li>Is the neighborhood safe?</li>
<li>What do students usually do on the weekends?</li>
<li>Where are the nearest malls/grocery stores?</li>
<li>How easy is it to get off campus? Does the school provide transportation, or do you need your own car?</li>
</ul>
<h4 class="wp-block-heading"><strong>Student and Alumni Makeup</strong></h4>
<ul>
<li>What is the most popular major?</li>
<li>Is the student body demographic diverse or homogenous?</li>
<li>What fields of work do graduates usually enter?</li>
<li>What’s the average graduate’s starting salary?</li>
<li>Are there any notable alumni?</li>
<li>Does the school offer need-based or need-blind financial aid?</li>
</ul>
<h4 class="wp-block-heading"><strong>College Statistics</strong></h4>
<ul>
<li>What is the national school ranking?</li>
<li>What is the student graduation rate?</li>
<li>What is the student retention rate?</li>
<li>What is the annual tuition?</li>
</ul>


<h2 id="research-schools" class="wp-block-heading"><strong>Research Schools</strong></h2>
<p>After narrowing down the qualities you want in a college, it’s time to start digging. Take advantage of the Internet by looking into schools of interest, reading articles, and using different online tools.</p>
<p><a href="https://www.niche.com/colleges/search/best-colleges/">Niche</a> is a useful site to look through if you want to know more about how different colleges are ranked in the United States.</p>
<p>If you want to know more about a school’s numbers, consider using the U.S. Department of Education’s <a href="https://collegescorecard.ed.gov/">College Scorecard</a>. The website gives each college a “scorecard,” which tells you everything about the school’s graduation rate, financial aid costs, test scores, and acceptance rates.</p>
<p><a href="https://bigfuture.collegeboard.org/college-search">The College Board</a> also has a great college search tool that allows you to explore colleges by filtering through location, major, type, and campus life.</p>


<h2 id="create-a-document-with-all-the-details" class="wp-block-heading"><strong>Create a Document With All the Details</strong></h2>
<p>Now that you have an idea of what schools you might be interested in, along with the qualities you look for in a school, it’s time to get it all on paper. List out each of the schools, how they rank in terms of the qualities you’re looking for, and whether they’re a safety, match, or reach school.</p>


<p>Many <a href="https://www.collegevine.com/admissions-calculator">online tools</a> can help you determine which category the school falls into based on <em>your</em> academic profile, standardized test scores, GPA, and more. It’s important to have a mix of safety, match, and reach schools to increase your overall chance of admission.</p>
<p>Consider using this sample college profile as inspiration:</p>
<p><strong>School: </strong>UNC-Chapel Hill<br />
<strong>Category: </strong>Match<br />
<strong>Acceptance Rate: </strong>21%<br />
<strong>Potential Major: </strong>Computer Science<br />
<strong>Undergraduate Size: </strong>19,743<br />
<strong>National Ranking: </strong>29<br />
<strong>Annual Cost of Tuition:</strong> Assessed on a per credit hour basis<br />
<strong>City: </strong>College town in Chapel Hill, North Carolina<br />
<strong>Weather: </strong>Has all four seasons, sunnier than northeast schools<br />
<strong>Total Amount of Clubs</strong>: 976<br />
<strong>Potential clubs: </strong>Apples Service-Learning Program, ArtHeels<br />
<strong>General Thoughts: </strong>First public university in the United States, well-known for academics, lots of school spirit…</p>


<h2 id="narrow-down-the-list" class="wp-block-heading"><strong>Narrow Down the List</strong></h2>
<p>Narrowing down a college list can be challenging, but it’s an important part of the college search process. <strong>Generally, it’s recommended that students have anywhere between 5-10 colleges on their college list.</strong> Here are some steps to help you narrow down your college list:</p>
<h3 class="wp-block-heading"><strong>#1: Speak With Current Students and Alumni</strong></h3>
<p>Speaking with current students and alumni at the schools you are interested in is an effective way to learn more about a school and determine whether you’d be interested in attending.</p>
<p>You can do this in several ways:</p>
<ul>
<li>Reach out to the school’s admissions office and ask them to put you in contact with a current student.</li>
<li>Connect with a student or alumni on LinkedIn.</li>
<li>Speak with any high school alumni who attend/attended the school.</li>
<li>Participate in a Student for a Day program. <a href="https://admissions.uconn.edu/visit/husky-for-a-day/">Some schools</a> will allow you to tag along with a student for a day to get a feel for what it’d be like to attend the university.</li>
</ul>
<p>Make sure to ask them specific questions like:</p>
<ul>
<li>What is your favorite and least favorite part about attending?</li>
<li>Do you feel like professors are helpful and responsive to your needs?</li>
<li>Do you feel supported by your academic advisor?</li>
<li>How easy or difficult was it to settle in here? (ie. to make friends, to find clubs to join, etc.)</li>
</ul>


Compare personalized student loan rates

<h3 class="wp-block-heading"><strong>#2: Tour the Campus</strong></h3>
<p>There’s no better way to determine your “fit” with a school than visiting it. This way, you can really get a feel for what the school is like and decide whether you can see yourself there for the next four years.</p>
<p>However, visiting in person isn’t always a make-it-or-break-it for determining whether you “fit” at a school. There are plenty of students who never visited the campus and ended up loving it, and vice versa.</p>
<p>If visiting in person isn’t an option for you, check whether or not the school has a tool that allows you to do virtual tours. Youtube is another great place to see what a school looks like.</p>


<h3 class="wp-block-heading"><strong>#3: Seek Advice</strong></h3>
<p>Talk to guidance counselors, teachers, and other trusted adults to get additional perspectives. Speaking to individuals who have been through the process before can help you gain some insights into how <em>you</em> can whittle down your college list.</p>


<h3 class="wp-block-heading"><strong>#4: Have a Serious Talk With Your Parents About Affording College</strong></h3>
<p>Whether or not affordability is a factor in determining which colleges you want to apply to, it’s important to have a serious talk with your parents about paying for your education. This way, your parents will have a general idea of what costs to expect, while you can gain more exposure to what finance in the real world looks like.</p>
<p>Speak with your parents to determine what is and what isn’t affordable.</p>


<h2 id="stay-open-to-the-possibilities" class="wp-block-heading"><strong>Stay Open to the Possibilities</strong></h2>
<p>It’s important to keep an open mind throughout the college application process. While attending your top school may be your #1 goal, it may not always be the case that things work out the way you want them to.</p>
<p>Nothing is set in stone — you may be surprised by the offers you receive from other colleges and where you end up.</p>


Building a college list, or a list of colleges and universities you’d be interested in applying to, is an important step when applying to college.

It can help you identify your best-fit colleges, narrow down your options, and make informed decisions about where to apply and ultimately attend.

If you don’t know how to build a college list, follow these steps.

<h3 class="wp-block-heading"><strong>#2: Tour the Campus</strong></h3>
There’s no better way to determine your “fit” with a school than visiting it. This way, you can really get a feel for what the school is like and decide whether you can see yourself there for the next four years.

However, visiting in person isn’t always a make-it-or-break-it for determining whether you “fit” at a school. There are plenty of students who never visited the campus and ended up loving it, and vice versa.

If visiting in person isn’t an option for you, check whether or not the school has a tool that allows you to do virtual tours. Youtube is another great place to see what a school looks like.

<h3 class="wp-block-heading"><strong>#3: Seek Advice</strong></h3>
Talk to guidance counselors, teachers, and other trusted adults to get additional perspectives. Speaking to individuals who have been through the process before can help you gain some insights into how <em>you</em> can whittle down your college list.

<h3 class="wp-block-heading"><strong>#4: Have a Serious Talk With Your Parents About Affording College</strong></h3>
Whether or not affordability is a factor in determining which colleges you want to apply to, it’s important to have a serious talk with your parents about paying for your education. This way, your parents will have a general idea of what costs to expect, while you can gain more exposure to what finance in the real world looks like.

Speak with your parents to determine what is and what isn’t affordable.

<h2 id="stay-open-to-the-possibilities" class="wp-block-heading"><strong>Stay Open to the Possibilities</strong></h2>
It’s important to keep an open mind throughout the college application process. While attending your top school may be your #1 goal, it may not always be the case that things work out the way you want them to.

Nothing is set in stone — you may be surprised by the offers you receive from other colleges and where you end up.

<h2 id="start-early" class="wp-block-heading"><strong>Start Early</strong></h2>
Rome wasn’t built in a day, and your college list shouldn’t be either.

If you have the opportunity to do so, start building your college list during your junior year of high school. That way, you’ll have plenty of time to research colleges, gather information, and make informed decisions.

Starting early can also help you reflect on your priorities and goals, without the pressure and stress of impending deadlines.

<h2 id="create-a-list-of-must-haves" class="wp-block-heading"><strong>Create a List of Must-Haves</strong></h2>
Whether it’s a fierce school spirit, an emphasis on STEM fields, or rich research opportunities, brainstorm a list of qualities you want your future college to have. This will help you narrow down your college list by allowing you to see how the schools you’ve selected differ.

Here are some factors you can consider:
<h4 class="wp-block-heading"><strong>Inside the Classroom</strong></h4>
<ul>
 	<li>How big is the average classroom?</li>
 	<li>Do you prefer large or small classroom sizes?</li>
 	<li>What kind of academic resources does the college have?</li>
 	<li>What major/field of study is the college known for?</li>
 	<li>What are the top programs at the college?</li>
</ul>
<h4 class="wp-block-heading"><strong>Outside the Classroom</strong></h4>
<ul>
 	<li>How many clubs (that you would be interested in) are there on campus?</li>
 	<li>What do students do for fun?</li>
 	<li>Is the campus walkable? Do you need a bike?</li>
 	<li>Do students generally live on campus or off campus?</li>
 	<li>Does the college provide housing for all four years?</li>
 	<li>Is Greek life prominent on campus?</li>
 	<li>What does the social scene look like?</li>
</ul>
<h4 class="wp-block-heading"><strong>Beyond the Campus</strong></h4>
<ul>
 	<li>Is the campus in a small town or a big city? Which do you prefer?</li>
 	<li>What does the weather look like?</li>
 	<li>Is the nearest city accessible?</li>
 	<li>Is the neighborhood safe?</li>
 	<li>What do students usually do on the weekends?</li>
 	<li>Where are the nearest malls/grocery stores?</li>
 	<li>How easy is it to get off campus? Does the school provide transportation, or do you need your own car?</li>
</ul>
<h4 class="wp-block-heading"><strong>Student and Alumni Makeup</strong></h4>
<ul>
 	<li>What is the most popular major?</li>
 	<li>Is the student body demographic diverse or homogenous?</li>
 	<li>What fields of work do graduates usually enter?</li>
 	<li>What’s the average graduate’s starting salary?</li>
 	<li>Are there any notable alumni?</li>
 	<li>Does the school offer need-based or need-blind financial aid?</li>
</ul>
<h4 class="wp-block-heading"><strong>College Statistics</strong></h4>
<ul>
 	<li>What is the national school ranking?</li>
 	<li>What is the student graduation rate?</li>
 	<li>What is the student retention rate?</li>
 	<li>What is the annual tuition?</li>
</ul>

<h2 id="research-schools" class="wp-block-heading"><strong>Research Schools</strong></h2>
After narrowing down the qualities you want in a college, it’s time to start digging. Take advantage of the Internet by looking into schools of interest, reading articles, and using different online tools.

<a href="https://www.niche.com/colleges/search/best-colleges/">Niche</a> is a useful site to look through if you want to know more about how different colleges are ranked in the United States.

If you want to know more about a school’s numbers, consider using the U.S. Department of Education’s <a href="https://collegescorecard.ed.gov/">College Scorecard</a>. The website gives each college a “scorecard,” which tells you everything about the school’s graduation rate, financial aid costs, test scores, and acceptance rates.

<a href="https://bigfuture.collegeboard.org/college-search">The College Board</a> also has a great college search tool that allows you to explore colleges by filtering through location, major, type, and campus life.

<h2 id="create-a-document-with-all-the-details" class="wp-block-heading"><strong>Create a Document With All the Details</strong></h2>
Now that you have an idea of what schools you might be interested in, along with the qualities you look for in a school, it’s time to get it all on paper. List out each of the schools, how they rank in terms of the qualities you’re looking for, and whether they’re a safety, match, or reach school.

A safety school is one where the student is virtually guaranteed admission.

A match school is one where the student has a good chance of admission.

A reach school is one where the student has a slim chance of admission.

Many <a href="https://www.collegevine.com/admissions-calculator">online tools</a> can help you determine which category the school falls into based on <em>your</em> academic profile, standardized test scores, GPA, and more. It’s important to have a mix of safety, match, and reach schools to increase your overall chance of admission.

Consider using this sample college profile as inspiration:

<strong>School: </strong>UNC-Chapel Hill
<strong>Category: </strong>Match
<strong>Acceptance Rate: </strong>21%
<strong>Potential Major: </strong>Computer Science
<strong>Undergraduate Size: </strong>19,743
<strong>National Ranking: </strong>29
<strong>Annual Cost of Tuition:</strong> Assessed on a per credit hour basis
<strong>City: </strong>College town in Chapel Hill, North Carolina
<strong>Weather: </strong>Has all four seasons, sunnier than northeast schools
<strong>Total Amount of Clubs</strong>: 976
<strong>Potential clubs: </strong>Apples Service-Learning Program, ArtHeels
<strong>General Thoughts: </strong>First public university in the United States, well-known for academics, lots of school spirit…

<h2 id="narrow-down-the-list" class="wp-block-heading"><strong>Narrow Down the List</strong></h2>
Narrowing down a college list can be challenging, but it’s an important part of the college search process. <strong>Generally, it’s recommended that students have anywhere between 5-10 colleges on their college list.</strong> Here are some steps to help you narrow down your college list:
<h3 class="wp-block-heading"><strong>#1: Speak With Current Students and Alumni</strong></h3>
Speaking with current students and alumni at the schools you are interested in is an effective way to learn more about a school and determine whether you’d be interested in attending.

You can do this in several ways:
<ul>
 	<li>Reach out to the school’s admissions office and ask them to put you in contact with a current student.</li>
 	<li>Connect with a student or alumni on LinkedIn.</li>
 	<li>Speak with any high school alumni who attend/attended the school.</li>
 	<li>Participate in a Student for a Day program. <a href="https://admissions.uconn.edu/visit/husky-for-a-day/">Some schools</a> will allow you to tag along with a student for a day to get a feel for what it’d be like to attend the university.</li>
</ul>
Make sure to ask them specific questions like:
<ul>
 	<li>What is your favorite and least favorite part about attending?</li>
 	<li>Do you feel like professors are helpful and responsive to your needs?</li>
 	<li>Do you feel supported by your academic advisor?</li>
 	<li>How easy or difficult was it to settle in here? (ie. to make friends, to find clubs to join, etc.)</li>
</ul>

Building a college list, or a list of colleges and universities you’d be interested in applying to, is an important step when applying to college.&nbsp; It can help you identify your best-fit colleges, narrow down your options, and make informed decisions about where to apply and ultimately attend.&nbsp; If you don’t know how to build &hellip; Continue reading "Guide on How to Build a College List"

Guide on How to Build a College List

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Grants and Scholarships

Grants and Scholarships Archives - Sparrow Nest

Welcome to college application season – one of the most exciting and slightly stressful milestones in your life.&nbsp; Though the college application process may seem overwhelming, familiarizing yourself with what it entails, including admission requirements, deadlines, and application timelines, is key to being prepared. Use this college application checklist to guide you at every step &hellip; Continue reading "Preparing for University: A College Application Checklist"

Preparing for University: A College Application Checklist

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Congratulations on being accepted into college! (*virtual fistbump*) If you’re leaving home to embrace the “dorm life,” we’re here to help. Our comprehensive college dorm checklist covers everything you should and should not pack as you leave home.&nbsp; What are Must-Haves for College Dorms? When you’re moving into a college dorm room, it’s better to &hellip; Continue reading "A Comprehensive College Dorm Checklist for Leaving Home"

A Comprehensive College Dorm Checklist for Leaving Home

<p>According to a study done by Fidelity, <a href="https://www.forbes.com/sites/robertfarrington/2021/10/04/when-should-parents-start-saving-for-college/?sh=55f29ec14b77">42%</a> of parents wish they started saving for college earlier. While saving for college can seem like a daunting challenge, we’re here to help.</p>
<p>If you’re wondering <a href="https://www.sparrowfi.com/blog/when-should-parents-start-saving-for-college">when you should start</a> saving for your child’s college education, you’re in the right place. Keep reading to learn about when you should start that college fund, how much money you should save, and what college savings options you have.</p>


<h2 id="h-when-parents-should-start-saving-for-college" class="wp-block-heading"><strong>When Parents Should Start Saving for College</strong></h2>
<p>The cost of college tuition rises annually due to inflation. In fact, between 1980 and 2020, the cost of tuition rose by <a href="https://www.forbes.com/advisor/student-loans/college-tuition-inflation/">169%</a>. So, it’s important that parents start saving for college as <em>early as possible. </em></p>
<p>That said, experts advise that worries about the “<em>when”</em> should not hinder parents from saving <em>now</em>. <a href="https://www.forbes.com/sites/robertfarrington/2021/10/04/when-should-parents-start-saving-for-college/?sh=55f29ec14b77">Annette VanderLinde</a>, the Chief Client Officer for Portfolio Solutions, states that, &#8220;Either there’s too much stress placed upon opening a college savings account right after birth, or regret in not starting a savings account earlier. The key is to just get started and let go of the worry.&#8221;</p>
<p>Whether your child is six or sixteen, you should be looking into options and saving for college as soon as possible.</p>
<p>It is important to note that parents who begin saving later will have to contribute <em>more</em> money than parents who began saving earlier to “catch up.” Parents who begin saving earlier have time and <a href="https://www.sparrowfi.com/blog/simple-vs-compound-interest-what-you-need-to-know">compound interest</a> on their side, meaning that their gains may be substantially larger.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/when-should-parents-start-saving-for-college">Learn more about when parents should start saving for college</a></p>


<h2 id="h-what-to-do-if-you-re-getting-a-late-start-on-saving" class="wp-block-heading"><strong>What to Do If You’re Getting a Late Start on Saving</strong></h2>
<p>If you are starting late on saving for college, it may be smarter to take on less risk as market fluctuations can be a detrimental player to your college savings goal. Perhaps it would be wiser to look into more safe, secure investments or age-based plans.</p>
<p>If you don’t reach sufficient savings, you should look into the <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">different types of financial aid for college</a>. Additionally, you can use <a href="http://sparrowfi.com/">Sparrow</a> to find the <a href="https://www.sparrowfi.com/parent-student-loan">best parent student loan rates</a> and compare across multiple lenders in minutes.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/best-parent-loans-for-college">Best parent loans for college</a></p>


<h2 id="h-how-much-parents-should-save-for-college" class="wp-block-heading"><strong>How Much Parents Should Save for College</strong></h2>
<p>While there is no “right” answer to <a href="https://www.sparrowfi.com/blog/how-much-to-save-for-college">how much parents should save for college</a>, here are some general guidelines for how much you should have saved by the time your child enters college.</p>
<p> </p>
<h3 id="h-the-⅓-rule" class="wp-block-heading"><strong>The ⅓ Rule</strong></h3>
<p>The ⅓ rule states that parents should be able to pay for their child’s college in thirds:</p>
<ul>
<li>⅓ of the tuition should be paid by the parents’ <em>income</em></li>
<li>⅓ should be paid by <em>savings</em></li>
<li>⅓ should be paid for by grants, scholarships, and other sources of financial aid.</li>
</ul>
<p>To calculate what ⅓ of tuition may cost when your child enters college, use a college cost projector calculator such as <a href="https://vanguard.wealthmsi.com/collcost.php">Vanguard’s</a>. Then, divide the projected cost by 3 to find the amount you should aim to save.</p>
<p>For example, let’s say that your child was born in 2015. While you don’t know which school your child will attend, you know they will enroll in around 11 years. According to Vanguard, 4 years of college will cost around $167,266 total by that time. So, you’d want to aim to save $55,755.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">What are the different types of financial aid options?</a></p>

<h3 id="h-the-2k-rule" class="wp-block-heading"><strong>The 2k Rule</strong></h3>
<p>The 2k Rule expects that the cost of tuition will grow 3% above the national inflation rate in a four-year period and that parents will cover 50% of their child’s tuition with savings.</p>
<p>To calculate how much you will need to save to cover 50% of your child’s tuition with +3% to the national inflation rate every four years, take the following steps:</p>
<ol>
<li>Multiply your child’s current age by $2,000. <strong>(Ex. Your child is 16 years old. 16 x 2,000 is 32,000)</strong>.</li>
<li>Calculate how many years left until your child goes to college, and multiply that number by $2,000. <strong>(Ex. Your child is 16 years old and you expect them to go to college in one year. 1 x 2,000 is 2,000.)</strong></li>
<li>Add up the totals from steps one and two to determine roughly how much money you will need to save up to pay for 50% of your child’s tuition by the time they go to college. <strong>(32,000 + 2,000 is 34,000). </strong></li>
</ol>
<p>Fidelity’s <a href="https://www.fidelity.com/misc/college-savings/college_savings.html">college savings calculator</a> can also do the math for you.</p>


<h2 id="h-the-best-way-to-save-for-your-child-s-college" class="wp-block-heading"><strong>The Best Way to Save for Your Child’s College</strong></h2>
<p>As a parent, there are a variety of <a href="https://www.sparrowfi.com/blog/the-best-ways-to-start-saving-for-college">ways to save for your child’s college</a>. Here are a few options to consider:</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/best-parent-loans-for-college">Best parent loans for college</a></p>
<h3 id="h-529-plans" class="wp-block-heading"><strong>529 Plans</strong></h3>
<p>A 529 Plan is a college savings plan that offers both federal and state benefits when you use the money for educational purposes. There are two types of 529 Plans: an educational savings plan and a prepaid tuition plan.</p>
<ul>
<li>Educational Savings Plan: Parents can contribute money to the educational savings plan and choose investment options.</li>
<li>Prepaid Tuition Plan: Parents can pay tuition that is based on the current tuition in advance for a specific university/group of universities.</li>
</ul>


<h3 id="h-mutual-funds" class="wp-block-heading"><strong>Mutual Funds</strong></h3>
<p>Mutual funds are a type of investment fund that allows you to <em>diversify</em> your stock holdings by buying different stock options instead of just one. Your investment portfolio is usually managed by financial advisors, to whom you give your money to. As a parent, this option is a great way to start saving for college.</p>


<h3 id="h-custodial-accounts" class="wp-block-heading"><strong>Custodial Accounts</strong></h3>
<p>Custodial accounts are brokerage accounts that you open for your child and transfer to them once they reach the age of 18, 21, or 25 years old. You can invest in stocks, mutual funds, and bonds with a custodial account.</p>


<h3 id="h-savings-bonds" class="wp-block-heading"><strong>Savings Bonds</strong></h3>
<p>Savings bonds are securities that are backed by the United States Government. They are incredibly safe investments with a 100% money-back guarantee, along with any interest that accrues.</p>


<h3 id="h-roth-iras" class="wp-block-heading"><strong>Roth IRAs</strong></h3>
<p>Roth IRAs are individual retirement accounts that you can put after-tax money into and enjoy tax-free growth and withdrawals. Penalties can be waived if money is withdrawn and used for educational expenses.</p>


<h2 id="h-should-parents-save-for-their-child-s-college" class="wp-block-heading"><strong>Should Parents Save for Their Child’s College?</strong></h2>
<p>Saving for your child’s educational expenses comes with many benefits. For one, it will alleviate the thousands of dollars in debt that your child will have to pay off. If you start early, you will have the power of compound interest and time on your side, allowing you to save more with less. Plus, it is better to save money now rather than borrow later.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/best-student-loans-for-parents-with-bad-credit">Best student loans for parents with bad credit</a></p>
<p>However, there are certain things that are far more financially beneficial for your family and should take precedence over a college fund, such as:</p>
<ul>
<li><strong>An emergency fund:</strong> Every family needs a rainy day fund for any storms that life throws at you. Whether it is an unexpected medical emergency, a necessary home repair, or an out-of-the-blue expense, you’ll want to be prepared for whatever comes your way.</li>
<li><strong>Paying off high-interest debt:</strong> High-interest debt is notorious for growing exponentially, putting many families in more debt than they expected in a short amount of time. Before your debt becomes a larger problem than it has to be, <a href="https://www.sparrowfi.com/blog/how-to-pay-off-200k-in-student-loans">paying off your high-interest debt</a> should be at the forefront of your financial priorities.</li>
<li><strong>In some cases, a retirement fund:</strong> Retirement can be expensive. According to the <a href="https://en.as.com/latest_news/retirement-in-the-usa-how-much-money-do-i-have-to-save-and-which-states-cost-the-most-n/">World Population Review</a>, you need at least $905,000 in your retirement savings to retire comfortably in 2022. It’s a difficult position to be in, but you’ll have to determine what costs more: the financial burden you may be on your children when you are retired versus the student debt your child will have to shoulder.</li>
</ul>
<p></p>
<p> </p>
<p>Saving for college costs should ultimately depend on <em>your</em> family’s financial situation. For some, it is more beneficial to save money now than to borrow later. For others, spending money to tie up loose ends is far more important than putting the money into a savings account.</p>
<p><strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/parent-student-loan">Compare parent loan rates across different lenders</a></p>

<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts from the Nest</strong></h2>
<p>Saving for college as a parent can be a large concern. If your family is in the financial standing to save for college, remember to <em>start saving early</em>. Compound interest and time will be your two financial saviors in the face of college inflation.</p>
<p>Between the college fund options discussed above, be sure to thoroughly research each one to find what’s most suitable for you and your child.</p>
<p>Remember, not all families are in the position to start saving for college, and that is okay. Paying off high-interest debt, saving for your retirement, and adding to your emergency fund are all valid alternatives that will benefit your family in the long run.</p>
<p> </p>
<div class="wp-block-spacer" aria-hidden="true"></div>
<p><em><a href="http://sparrowfi.com">Sparrow</a> aims to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.</em></p>

According to a study done by Fidelity, <a href="https://www.forbes.com/sites/robertfarrington/2021/10/04/when-should-parents-start-saving-for-college/?sh=55f29ec14b77">42%</a> of parents wish they started saving for college earlier. While saving for college can seem like a daunting challenge, we’re here to help.

If you’re wondering <a href="https://www.sparrowfi.com/blog/when-should-parents-start-saving-for-college">when you should start</a> saving for your child’s college education, you’re in the right place. Keep reading to learn about when you should start that college fund, how much money you should save, and what college savings options you have.

<h3 id="h-mutual-funds" class="wp-block-heading"><strong>Mutual Funds</strong></h3>
Mutual funds are a type of investment fund that allows you to <em>diversify</em> your stock holdings by buying different stock options instead of just one. Your investment portfolio is usually managed by financial advisors, to whom you give your money to. As a parent, this option is a great way to start saving for college.

Earnings are subject to annual income tax.

Capital gains are subject to tax when sold.

Earnings made on mutual funds will be viewed on your child’s FAFSA, affecting financial aid eligibility.

<h3 id="h-custodial-accounts" class="wp-block-heading"><strong>Custodial Accounts</strong></h3>
Custodial accounts are brokerage accounts that you open for your child and transfer to them once they reach the age of 18, 21, or 25 years old. You can invest in stocks, mutual funds, and bonds with a custodial account.

Your child may be subject to the kiddie tax when they receive the account. The tax is on any unearned income they receive that exceeds $2,300 when or before they are 23 years old.

The brokerage account will be viewed as your child’s financial assets on their FAFSA, affecting financial aid distribution.

The account’s value can be removed from your gross estate.

<h3 id="h-savings-bonds" class="wp-block-heading"><strong>Savings Bonds</strong></h3>
Savings bonds are securities that are backed by the United States Government. They are incredibly safe investments with a 100% money-back guarantee, along with any interest that accrues.

$10,000 limit for individuals and $20,000 limit for joint couples annually.

Lower returns compared to other investment options.

<h3 id="h-roth-iras" class="wp-block-heading"><strong>Roth IRAs</strong></h3>
Roth IRAs are individual retirement accounts that you can put after-tax money into and enjoy tax-free growth and withdrawals. Penalties can be waived if money is withdrawn and used for educational expenses.

Maximum annual contribution is $6,000 if you are under 50 years old.

Educational withdrawals will count as untaxed income and reduce your child’s financial aid eligibility.

Only for individuals who earn less than $144,000 or joint individuals who earn less than $214,000 annually.

Offers a wide range of investment options.

Not counted as a parent asset on the FAFSA.

<h2 id="h-should-parents-save-for-their-child-s-college" class="wp-block-heading"><strong>Should Parents Save for Their Child’s College?</strong></h2>
Saving for your child’s educational expenses comes with many benefits. For one, it will alleviate the thousands of dollars in debt that your child will have to pay off. If you start early, you will have the power of compound interest and time on your side, allowing you to save more with less. Plus, it is better to save money now rather than borrow later.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/best-student-loans-for-parents-with-bad-credit">Best student loans for parents with bad credit</a>

However, there are certain things that are far more financially beneficial for your family and should take precedence over a college fund, such as:
<ul>
 	<li><strong>An emergency fund:</strong> Every family needs a rainy day fund for any storms that life throws at you. Whether it is an unexpected medical emergency, a necessary home repair, or an out-of-the-blue expense, you’ll want to be prepared for whatever comes your way.</li>
 	<li><strong>Paying off high-interest debt:</strong> High-interest debt is notorious for growing exponentially, putting many families in more debt than they expected in a short amount of time. Before your debt becomes a larger problem than it has to be, <a href="https://www.sparrowfi.com/blog/how-to-pay-off-200k-in-student-loans">paying off your high-interest debt</a> should be at the forefront of your financial priorities.</li>
 	<li><strong>In some cases, a retirement fund:</strong> Retirement can be expensive. According to the <a href="https://en.as.com/latest_news/retirement-in-the-usa-how-much-money-do-i-have-to-save-and-which-states-cost-the-most-n/">World Population Review</a>, you need at least $905,000 in your retirement savings to retire comfortably in 2022. It’s a difficult position to be in, but you’ll have to determine what costs more: the financial burden you may be on your children when you are retired versus the student debt your child will have to shoulder.</li>
</ul>


 

Saving for college costs should ultimately depend on <em>your</em> family’s financial situation. For some, it is more beneficial to save money now than to borrow later. For others, spending money to tie up loose ends is far more important than putting the money into a savings account.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/parent-student-loan">Compare parent loan rates across different lenders</a>

<h2 id="h-closing-thoughts-from-the-nest" class="wp-block-heading"><strong>Closing Thoughts from the Nest</strong></h2>
Saving for college as a parent can be a large concern. If your family is in the financial standing to save for college, remember to <em>start saving early</em>. Compound interest and time will be your two financial saviors in the face of college inflation.

Between the college fund options discussed above, be sure to thoroughly research each one to find what’s most suitable for you and your child.

Remember, not all families are in the position to start saving for college, and that is okay. Paying off high-interest debt, saving for your retirement, and adding to your emergency fund are all valid alternatives that will benefit your family in the long run.

 
<div class="wp-block-spacer" aria-hidden="true"></div>
<em><a href="http://sparrowfi.com">Sparrow</a> aims to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.</em>

<h2 id="h-when-parents-should-start-saving-for-college" class="wp-block-heading"><strong>When Parents Should Start Saving for College</strong></h2>
The cost of college tuition rises annually due to inflation. In fact, between 1980 and 2020, the cost of tuition rose by <a href="https://www.forbes.com/advisor/student-loans/college-tuition-inflation/">169%</a>. So, it’s important that parents start saving for college as <em>early as possible. </em>

That said, experts advise that worries about the “<em>when”</em> should not hinder parents from saving <em>now</em>. <a href="https://www.forbes.com/sites/robertfarrington/2021/10/04/when-should-parents-start-saving-for-college/?sh=55f29ec14b77">Annette VanderLinde</a>, the Chief Client Officer for Portfolio Solutions, states that, "Either there’s too much stress placed upon opening a college savings account right after birth, or regret in not starting a savings account earlier. The key is to just get started and let go of the worry."

Whether your child is six or sixteen, you should be looking into options and saving for college as soon as possible.

It is important to note that parents who begin saving later will have to contribute <em>more</em> money than parents who began saving earlier to “catch up.” Parents who begin saving earlier have time and <a href="https://www.sparrowfi.com/blog/simple-vs-compound-interest-what-you-need-to-know">compound interest</a> on their side, meaning that their gains may be substantially larger.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/when-should-parents-start-saving-for-college">Learn more about when parents should start saving for college</a>

<h2 id="h-what-to-do-if-you-re-getting-a-late-start-on-saving" class="wp-block-heading"><strong>What to Do If You’re Getting a Late Start on Saving</strong></h2>
If you are starting late on saving for college, it may be smarter to take on less risk as market fluctuations can be a detrimental player to your college savings goal. Perhaps it would be wiser to look into more safe, secure investments or age-based plans.

If you don’t reach sufficient savings, you should look into the <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">different types of financial aid for college</a>. Additionally, you can use <a href="http://sparrowfi.com/">Sparrow</a> to find the <a href="https://www.sparrowfi.com/parent-student-loan">best parent student loan rates</a> and compare across multiple lenders in minutes.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/best-parent-loans-for-college">Best parent loans for college</a>

<h2 id="h-how-much-parents-should-save-for-college" class="wp-block-heading"><strong>How Much Parents Should Save for College</strong></h2>
While there is no “right” answer to <a href="https://www.sparrowfi.com/blog/how-much-to-save-for-college">how much parents should save for college</a>, here are some general guidelines for how much you should have saved by the time your child enters college.

 
<h3 id="h-the-⅓-rule" class="wp-block-heading"><strong>The ⅓ Rule</strong></h3>
The ⅓ rule states that parents should be able to pay for their child’s college in thirds:
<ul>
 	<li>⅓ of the tuition should be paid by the parents’ <em>income</em></li>
 	<li>⅓ should be paid by <em>savings</em></li>
 	<li>⅓ should be paid for by grants, scholarships, and other sources of financial aid.</li>
</ul>
To calculate what ⅓ of tuition may cost when your child enters college, use a college cost projector calculator such as <a href="https://vanguard.wealthmsi.com/collcost.php">Vanguard’s</a>. Then, divide the projected cost by 3 to find the amount you should aim to save.

For example, let’s say that your child was born in 2015. While you don’t know which school your child will attend, you know they will enroll in around 11 years. According to Vanguard, 4 years of college will cost around $167,266 total by that time. So, you’d want to aim to save $55,755.

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">What are the different types of financial aid options?</a>

<h3 id="h-the-2k-rule" class="wp-block-heading"><strong>The 2k Rule</strong></h3>
The 2k Rule expects that the cost of tuition will grow 3% above the national inflation rate in a four-year period and that parents will cover 50% of their child’s tuition with savings.

To calculate how much you will need to save to cover 50% of your child’s tuition with +3% to the national inflation rate every four years, take the following steps:
<ol>
 	<li>Multiply your child’s current age by $2,000. <strong>(Ex. Your child is 16 years old. 16 x 2,000 is 32,000)</strong>.</li>
 	<li>Calculate how many years left until your child goes to college, and multiply that number by $2,000. <strong>(Ex. Your child is 16 years old and you expect them to go to college in one year. 1 x 2,000 is 2,000.)</strong></li>
 	<li>Add up the totals from steps one and two to determine roughly how much money you will need to save up to pay for 50% of your child’s tuition by the time they go to college. <strong>(32,000 + 2,000 is 34,000). </strong></li>
</ol>
Fidelity’s <a href="https://www.fidelity.com/misc/college-savings/college_savings.html">college savings calculator</a> can also do the math for you.

<h2 id="h-the-best-way-to-save-for-your-child-s-college" class="wp-block-heading"><strong>The Best Way to Save for Your Child’s College</strong></h2>
As a parent, there are a variety of <a href="https://www.sparrowfi.com/blog/the-best-ways-to-start-saving-for-college">ways to save for your child’s college</a>. Here are a few options to consider:

<strong>&gt;&gt; MORE:</strong> <a href="https://www.sparrowfi.com/blog/best-parent-loans-for-college">Best parent loans for college</a>
<h3 id="h-529-plans" class="wp-block-heading"><strong>529 Plans</strong></h3>
A 529 Plan is a college savings plan that offers both federal and state benefits when you use the money for educational purposes. There are two types of 529 Plans: an educational savings plan and a prepaid tuition plan.
<ul>
 	<li>Educational Savings Plan: Parents can contribute money to the educational savings plan and choose investment options.</li>
 	<li>Prepaid Tuition Plan: Parents can pay tuition that is based on the current tuition in advance for a specific university/group of universities.</li>
</ul>

There will be penalties if the money is used for non-educational purposes.

Limited investment options in comparison to other savings options.

Earnings and withdrawals are tax-free for educational expenses.

Investments can grow up to $500,000 over the life of the account.

When the owner of the 529 Plan is a custodial parent or the dependent student, the total value must be reported as a parent asset on the FAFSA.

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