Student loans for the credit challenged?

lendaddy · 11:36 AM

I have an old high-school buddy that went back to college (in his 30's after many mistakes) in hopes of going to law school. He's about three years in and has been getting Federal loans. Well, the check didn't come this semester and when he called they said "sorry, you've reached the limit($40k-$50k), no more money for you."

He has checked with the school and all the other loan programs require at least the illusion of decent credit (which he does not possess).

Does this sound right?

He's made his own bed so I'm not crying for him but does he have options for student loans with bad credit?

legion · 07-26-2007, 11:43 AM

My sister's best friend graduated after 7 years at Columbia with a bachelor's in drama...this after majors in anthropology, psychology, and English, among others. He has over $90,000 in student loan debt...and works on a cash basis as a mover. A quick estimate puts his monthly student-loan payments at $1,125.

How was he able to get $90,000 in student loads?

Seems like there should be a common-sense element in the application process.

Will a drama-major ever be able to repay $90,000? NO.

Will a lawyer ever be able to repay $70,000? Probably.

lendaddy · 07-26-2007, 11:47 AM

But did she have OK credit? That's this guys problem.

legion · 07-26-2007, 11:50 AM

I have no idea. Considering his long pattern of bad choices, I'd be surprised if he did have good credit, but stranger things have happened.

I thought most student loans were pretty easy on bad/no credit.

lendaddy · 07-26-2007, 11:53 AM

Quote:

Originally Posted by legion

I have no idea. Considering his long pattern of bad choices, I'd be surprised if he did have good credit, but stranger things have happened.

I thought most student loans were pretty easy on bad/no credit.

That's what I thought as well but this guys says no and I'm trying to figure out if he has it correct or not.

Rick Lee · Rick Lee's Garage

I don't know if the loophole has been closed yet, but for a while, there was a huge incentive for banks or whomever could, to make loans to students, regardless of ability or willingness to repay. The U.S. Dept. of Edu. was offering ridiculously low rates wholesale to banks, which could then loan money out at whatever the standard student loan rates were and then sell those loans right back to Dept. of Ed for something like a 2-3 point immediate gain. Once this loophole got noticed, I think there was a mad dash to loan out as much money to just about anyone as fast as possible and sell it to DOE before they closed the loophole.

Can you believe some of the majors that get endless student loans? Ever see an ad on Monster looking for philosophers? Yet, you can easily rack up close to $100k in debt studying philosophy.

competentone · 07-26-2007, 02:00 PM

I believe you can reach a limit when it comes to the government (insured) loans.

He should be talking with the school he's attending -- they are the ones who are getting the money from his attendence; they would know if there is any way he can get additional financing.

I'm thinking he is going to need a co-signer (aka "sucker") if he wants additional loans. He can start "begging" or he can "be a man" and get a job (or two) to pay for the rest of his education.